Rate hike probability nearing 90%, and the market fears not the hike itself, but “more hikes after the hike”

The Fed’s September rate decision is drawing closer, and the market has already entered “hawkish mode.” The prevailing expectation is a 25-basis-point hike, which could push the federal funds rate into the 3.75%—4.00% range. A Reuters poll shows that 85% of economists expect a hike at this meeting.

Interestingly, just a few days ago, the market was still discussing whether the Fed would continue to hold steady, but institutional views have now shifted noticeably. The reason is that inflationary pressure has reemerged, while international oil prices have climbed to around $100 or even higher, meaning energy costs could be passed on further to goods and services.

This leaves the Fed with an uncomfortable choice: if it does not hike, the market may interpret that as a lack of determination to fight inflation; if it hikes, it means financial conditions will tighten further, putting pressure on corporate financing, real estate, and high-valuation assets.

So what the market truly fears is not the 25 basis points itself. After all, expectations have already been priced in. The real danger is if the Fed signals that “September is only the beginning.”

Particular attention should be paid to the dot plot. If future interest-rate projections move noticeably higher, the market will need to reassess the timetable for rate cuts—or even further hikes. Treasury yields and the dollar could continue to strengthen, while volatility in BTC, gold, and growth stocks could also increase significantly.

Conversely, if the Fed hikes but emphasizes that future policy will be determined by the data, this hike could instead become a case of “bad news priced in.”

So this time, do not focus only on the rate-hike button. What will truly determine the market’s direction is whether the Fed continues to step on the accelerator after pressing the button.#美联储即将公布利率决定