The probability of a 25-basis-point interest rate increase at the Federal Reserve's September policy meeting has climbed to 65.9%, according to the latest reading from CME Group's FedWatch tool. The implied chance of a pause stands at 34.1%, reflecting a sharp repricing after Federal Reserve Chair Kevin Warsh's Jackson Hole remarks, which lifted expectations from roughly 35% only days earlier.
The CME FedWatch tool calculates these probabilities using prices from 30-Day Federal Funds futures traded at CME Group. Because these contracts settle against the average daily Effective Federal Funds Rate, their prices embed market expectations for the federal funds rate. The basic convention is implied rate = 100 − futures price; for example, a contract trading at 96.25 implies an average rate of approximately 3.75%. When an FOMC meeting falls partway through a month, CME builds a probability tree across possible 25-basis-point policy paths to isolate the expected move around that meeting.
As of August 31, 2026, the Fed's target range is 3.50%–3.75% following the July 29 decision to leave policy unchanged. The next scheduled FOMC decision is set for September 16, 2026, after the September 15–16 meeting. FedWatch is not an official Federal Reserve forecast; it is a market-implied gauge that can shift quickly on inflation data, employment reports, Fed communication and financial conditions.
The rise in rate-hike expectations has implications beyond bonds and equities. Higher rates tend to support the U.S. dollar and weigh on risk assets, including cryptocurrencies. Coinpaper's recent coverage noted that a cooler June CPI report had reduced tightening expectations and helped Bitcoin rally, while elevated rate expectations later weighed on the digital asset as it tested important support levels. Treasury yields have also repriced, with the policy-sensitive two-year yield rising alongside the shift in FedWatch probabilities.
For consumers, a September hike would raise borrowing costs on variable-rate loans and could keep mortgage rates elevated, though savers may benefit from higher yields. Investors and traders will monitor upcoming inflation and employment releases for clearer signals before the FOMC decision.
