Investors brace for a Fed rate hike as inflation holds at 3.4% and geopolitical tensions drive oil prices higher, threatening to increase borrowing costs and market volatility.
Oil prices jumped due to Middle East conflicts, fueling inflation fears and supporting the case for Fed rate hikes.
The Federal Reserve is widely expected to raise interest rates at the upcoming September 16 meeting as inflation remains stuck at 3.4%. Persistent price pressures, compounded by rising oil costs due to Middle East conflicts, are forcing the central bank to tighten monetary policy to cool demand.
The Fed increases rates to make borrowing more expensive, which reduces consumer and business spending, thereby slowing demand and curbing inflation.