Rate hike odds rise as inflation remains stubborn

Investors are increasingly expecting the Federal Reserve to raise its benchmark interest rate by a quarter-point at its September meeting. FedWatch put the odds at 66% Monday, with roughly even odds of another increase in December.

The outlook followed Fed Chair Kevin Warsh’s remarks that underlying inflation trends had not meaningfully improved and that the central bank still had work to do. Economists remain divided over whether another increase is warranted.

A hike would raise borrowing costs as mortgage rates approach 7%, adding pressure to consumers already coping with persistent inflation and limited wage gains.

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