Traders are now seeing a near-certainty that the Federal Reserve enacts its third consecutive 0.75 percentage point interest rate increase when it meets later this month.
“In June a 75 [basis point] rate hike from the Federal Reserve was seen as surprising acceleration from the 50bp and 25bp delivered at the two previous meetings. Less than three months later, 75bp has become something of a global norm with both the [European Central Bank] and Bank of Canada set to raise rates by 75bp,” Citigroup economist Andrew Hollenhorst said in a client note Wednesday.
The Fed has increased interest rates four times this year for a total of 2.25 percentage points. Those increases included two 0.75 percentage point moves in June and July, the most aggressive since the Fed began using its benchmark funds rate as its chief policy tool in the early 1990s.