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A sharp rise in energy prices has pushed investors to increase their bets on a Federal Reserve rate rise, with market participants now calling next week's US central bank meeting "live." The oil move is the catalyst, and rate expectations are shifting around it.
From settled to live In rate markets, a "live" meeting is one where the outcome is genuinely uncertain, where a rate change is an active possibility rather than background noise.
Investors had not been treating next week's Federal Reserve decision that way. The sharp increase in energy prices changed the read. Oil and energy costs carry direct inflation implications.
They feed into the headline price data the Federal Reserve monitors and responds to. When energy prices rise sharply, investors revise upward their estimate of how much further the central bank may need to tighten.
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