Markets now estimate a 93% probability that the Federal Reserve (Fed) will announce its first rate hike since July 2023 today.
Looking at data since 2008, whenever expectations for a hike were this high, the Fed always implemented it.
If the Fed were to keep interest rates unchanged today, that would represent the biggest monetary policy surprise at a scheduled meeting since 1994.
However, this is a particularly unusual moment.
Fed Chair Warsh was appointed by President Trump just a few months ago, with the expectation that he would cut rates.
Now, markets expect Warsh’s first change to the fed funds rate to be an increase.
We expect a very busy day.
Looking at data since 2008, whenever expectations for a hike were this high, the Fed always implemented it.
If the Fed were to keep interest rates unchanged today, that would represent the biggest monetary policy surprise at a scheduled meeting since 1994.
However, this is a particularly unusual moment.
Fed Chair Warsh was appointed by President Trump just a few months ago, with the expectation that he would cut rates.
Now, markets expect Warsh’s first change to the fed funds rate to be an increase.
We expect a very busy day.