Nearly 60%, per the CME Group FedWatch Tool, is the current probability of a 25-basis-point Federal Funds Rate increase at the Federal Open Market Committee's September 15-16 meeting. That figure reset after Chairman Kevin Warsh's Aug. 28 speech, where he pledged to tame elevated inflation: "We have work to do." A hike would lift the funds rate from its current 3.50%-3.75% target to 3.75%-4.00%, raising short-term borrowing costs on credit cards and home-equity loans.
The two data prints that settle the question arrive this week. The Bureau of Labor Statistics releases August Producer Price Index figures on September 10 and the Consumer Price Index on September 11. Cool readings on both could keep the rate on hold; hot prints could break the committee's internal standoff toward action.
| Metric | Value |
|---|---|
| Current FFR target | 3.50%-3.75% |
| 25-bp hike probability (FedWatch) | ~60% |
| August FOMC vote to hold | 9-3 |
| Aug. PPI release | Sept. 10 |
| Aug. CPI release | Sept. 11 |
| FOMC meeting | Sept. 15-16 |
Committee split
The committee is divided. Federal Reserve Governor Christopher Waller said September 3 that he leans toward holding if August data shows continued progress toward the Fed's 2% inflation goal, though a hot print would shift his support toward a hike. New York Fed President John Williams called the most recent inflation readings "encouraging" but said he would consider a hike if August figures come in hot, identifying tariffs and energy prices from the Iran War as the biggest current drivers. Cleveland Fed President Beth Hammack, one of three members who voted for a 25-basis-point increase at the July FOMC meeting, posted September 4 that both data and anecdotes from her district signal current policy is insufficient: "Right now, what I'm hearing is that it's time to act."
The August FOMC vote was 9-3 to hold the funds rate in the current range, with the three dissenters favoring a hike. That run of holds followed three consecutive 25-basis-point cuts at the last FOMC meetings of 2025, described at the time as insurance against a softening labor market. The majority shifted once the inflation risk outweighed labor-market stabilization signals.
Supply-side drag on monetary traction
The August jobs report, released September 4, showed unemployment holding at 4.1% with job growth exceeding all estimates. Rob Conzo, CEO and Managing Director at The Wealth Alliance, noted that strong wage growth is absent from the August figures, suggesting today's inflation is not primarily a labor story. Supply-side inflation, he said, cannot be directly controlled by Fed monetary policy, meaning policymakers may have to tolerate some inflation volatility while preventing second-round effects such as wage catch-up demands and business pass-through costs.
Stephen Evans, Chief Investment Officer at Pave Finance, flagged that average hourly earnings and average workweek hours both rose in August, which could point to tightening labor supply. At approximately 4% unemployment, he said, the economy may be approaching the threshold where a tight labor market generates more persistent wage and price pressures, making rate cuts harder to defend and rate hikes more likely.