Markets brace for series of Federal Reserve rate hikes by mid-2026: WSJ

Markets are increasingly expecting the Federal Reserve to implement a series of interest rate hikes, according to a report by the Wall Street Journal. The anticipation includes a planned rate increase at the upcoming meeting, with projections for at least three more hikes by June. This development aligns with recent market movements, which show a marked rise in the probability of a rate hike by September, as evidenced by a significant increase in current pricing. The effective federal funds rate currently stands at 3.63%, with the Federal Reserve’s target range between 3.50% and 3.75%. The market odds of a rate hike by the September 15–16 meeting have surged to 78.5% from 54% just 24 hours ago. This spike suggests market participants are interpreting recent economic indicators as supportive of a tighter monetary policy. Similarly, the probability of a rate increase by the October meeting has climbed to 81.5%, reflecting a growing consensus on the need for further policy firming. The Federal Reserve, led by Chair Jerome H. Powell, is likely to be closely watched for any cues during upcoming meetings and statements. The market’s response indicates a strong expectation of additional p...