US August CPI Data Drives Fed Rate Hike Probability to 90.4%

According to CME FedWatch, the probability of the Federal Reserve raising its benchmark interest rate by 25 basis points in September stands at 90.4%, a sharp increase of 18 percentage points from 72.4% the previous day. The US Labor Department recently reported that August consumer price index (CPI) rose 3.4% year-on-year, meeting market expectations of 3.4%. Following this announcement, CME FedWatch's September rate hike probability surged immediately.

CME FedWatch is a tool provided by CME Group that calculates the likelihood of future Federal Open Market Committee (FOMC) interest rate changes based on prices of 30-day federal funds futures contracts. The metric reflects market participants' current pricing expectations rather than the Federal Reserve's official forecasts, making it a key indicator for financial market participants.