Hotter-Than-Expected Inflation Data Intensifies Fears of Federal Reserve Rate Hike

Recent inflation metrics, which came in hotter than anticipated, have led market participants to significantly adjust their near-term monetary policy expectations. The CME Group's FedWatch tool now indicates a 90% probability of a 25-basis-point interest rate hike by the Federal Reserve next month, with a minor possibility of a larger 50-basis-point increase.