Interest Rates Should Remain Unchanged Today, but at Least 3 Federal Reserve Rate Hikes Are Expected by September 2027

The Federal Reserve is expected to hold rates steady at today's 2 p.m. ET announcement, but the CME FedWatch Tool is pricing in at least 75 basis points of rate hikes by September 2027. Futures traders are positioning for a tightening cycle, not a pause.

Three inflation drivers are behind the shift: Trump's tariffs, Iran's closure of the Strait of Hormuz, and the AI infrastructure build-out. Together, they are pushing the Fed to prepare for a more aggressive hiking path.

That 75 bps figure equals three standard 25 bp increases, and the "at least" framing suggests the market sees risk skewed toward more tightening rather than less. Today's hold is likely a non-event; the forward guidance and any shift in the Fed's tone on those three drivers carry the market impact.

The equity risk is concentrated in the AI trade. The AI boom has powered stock market gains, and the market is historically expensive. Rising borrowing costs could pressure valuations if the data center build-out slows. Interpretation: the same AI spending that is feeding inflation concerns is also propping up equity multiples, which creates a feedback loop that could cut both ways.