Markets Anticipate Federal Reserve to Hold Rates, Though Hike Probability Remains Non-Trivial

Financial markets are largely expecting the Federal Reserve to keep its benchmark interest rate unchanged at 3.50%-3.75% following its FOMC meeting today. However, a significant 30-33% chance of a rate hike is still being priced in, driven by Fed Chair Kevin Warsh's hawkish stance on inflation and his cautious approach to forward guidance. Investors will closely scrutinize the FOMC statement and Chair Warsh's press conference for indications on the future trajectory of monetary policy.