87% chance the Fed raises rates tomorrow as oil tops $100 and inflation bites back

The Federal Reserve spent most of 2024 and early 2025 cutting rates. Now it looks ready to undo some of that work.

Futures markets are pricing in an 87% probability that the Fed raises its benchmark interest rate by 25 basis points when the Federal Open Market Committee wraps its two-day meeting on September 16. That would push the target federal funds range from 3.50%-3.75% up to 3.75%-4.00%, marking the first rate increase since July 2023.

The CME FedWatch Tool has been tracking probabilities in the 83%-93% range heading into the meeting. Prediction markets Kalshi and Polymarket are pointing in the same direction.

What flipped the consensus

Not long ago, most economists expected the Fed to hold rates steady. Then two things happened: fresh inflation data came in hotter than expected, and Brent crude oil crossed $100 a barrel.

A poll of economists taken after the latest inflation print found that 85% of respondents now expect a 25 basis point hike. A narrow majority of that same group also predicted at least one additional increase before the end of March 2027, suggesting this meeting is less of a one-off reaction and more of the opening move in a renewed tightening cycle.

The effective federal funds rate sits at approximately 3.63% right now. The Fed cut rates six times before this meeting, so any move upward represents a meaningful pivot in the policy narrative.

Why this meeting carries extra weight

The September FOMC meeting is not just about the rate decision. The committee will also release an updated “dot plot,” the summary of economic projections where each Fed official marks where they think rates should go over the next few years.

The announcement is scheduled for 2:00 p.m. ET on September 16, followed by a press conference with Fed Chair Jerome Powell. The rate move itself is largely priced in. What Powell says about future meetings is not.

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