Markets expected Kevin Warsh's first rate hike. August data left little room to wait.
Going into Wednesday's meeting, traders put an 87% chance on a quarter-point increase. The question was whether the Fed could afford to leave rates alone.
- Why the odds jumped: August brought firmer inflation and much stronger hiring than economists expected. Rate-hike expectations rose sharply over the following week.
- What the Fed signalled: Rates had been unchanged since December. Warsh had already warned that inflation remained too high and said the Fed was ready to act.
- What markets heard: Stock futures fell as investors prepared for tighter money. Separate calls from technology leaders to slow AI development added pressure to growth shares.