Rate-hike expectations are getting out of hand
SPY•Central bank meetings are imminent
The Federal Reserve will announce its latest monetary policy decision on September 16. As of 0830 GMT, derivatives markets pointed to a 93% chance that officials would raise the federal funds target range by a quarter of a percentage point to 3.75%-4.00%, according to CME FedWatch.
The Bank of England and the Bank of Japan are scheduled to hold policy meetings on September 17 and September 18, respectively.
Markets are pricing in too much tightening
Ahead of policy decisions in the US, UK and Japan, traders are now pricing in three to four rises in a year. It looks excessive: the energy price spike is more likely to sap growth than fuel lasting inflation. Unless officials push back, market views may become self-fulfilling.
