Only recently, most traders believed in lower rates. But the mood has shifted sharply: the market now gives a 60–66% chance of a 25-basis-point rate hike on September 16.

Factors that support the rate increase

Tougher Fed rhetoric

The Fed Chair’s speech at Jackson Hole triggered the shift in traders’ mood. He made it clear that the Fed would not tolerate persistent inflation and could raise rates again if they fail to see progress toward its 2% inflation target.

Elevated inflation

If the upcoming inflation data comes in higher than expected, rate-hike expectations may rise further. However, if inflation slows down, markets may put pressure on the US dollar.

Geopolitical risks

A new wave of tensions in the Middle East has pushed oil prices higher and raised concerns about another inflationary shock.

Higher oil prices

Higher energy prices could keep inflation elevated for longer than expected, giving the Fed another reason to maintain a restrictive policy.

Strong labor market

Recent employment data came in stronger than expected, which further strengthens the case for tighter policy.

•Will the Fed actually raise rates in September?

•Or has the market already gone too far with its expectations?

How will the market react to the Fed’s decision?

The Fed increases rates.

The market receives a confirmation of its recent shift in expectations, but traders will immediately start looking for clues of another hike to follow.

The Fed keeps the rate unchanged.

Market reaction could be more interesting. Markets may quickly unwind some of the recent bets on tighter policy.‌  ‌ ‌

The Fed sends new signals.

A stronger or softer message on the future policy could send the USD, gold, and US indices sharply in either direction.‌  ‌ ‌

What should a trader do before the rate decision?

Check current market expectations.

Mark key price levels.

Make sure you know what you will do in several possible scenarios.

Decide on your position size and risk.

•Most Trusted Broker — Asia 2026
•Broker of the Year — LATAM 2026

These awards confirm our commitment to building a rewarding trading environment and helping you uncover your potential. Thank you for choosing to trade with an award-winning broker!

Why choose MetaTrader 5 with Top Forex Brokers?

 •Blazing-fast execution & enhanced stability

 •38 built-in technical indicators & 21 timeframes for precision trading

 •Optimized for all devices—desktop, mobile & web

 •Trade a wide range of assets: Stocks, Commodities, Forex & more!

Best Forex Brokers

https://www.brokersss.com

Disclaimer: Trading forex and CFDs carries a high level of risk and may not be suitable for all investors. Ensure you understand the risks involved and consider your financial situation before trading.

Final reminder: This content is for educational purposes only and does not constitute financial advice. Trading forex, gold, and cryptocurrencies involves substantial risk of loss and is not suitable for every investor. Past performance is not indicative of future results. Always trade with money you can afford to lose and consider seeking independent financial advice.