The Federal Open Market Committee announces its rate decision at 2 p.m. ET Wednesday, and for the first time in Chair Kevin Warsh's tenure, the outcome is genuinely uncertain. The CME FedWatch tool has priced the odds of a quarter point hike anywhere between 10.7% and 46.5% over the past two weeks, before settling near 33% this morning, according to TradingEconomics. That is an unusual amount of movement for a meeting that, as recently as two weeks ago, was treated as a formality.
What has not moved nearly as much is the market's read on September. The FOMC's next meeting has been priced at roughly an 80% probability of a hike since late last week, a number that barely budged through Monday's oil driven de escalation trade or Tuesday night's missile attack on US forces. If there is a genuine Fed decision investors should be positioning around this week, the futures market is telling them it already happened, and it happened in September, not today.
The Odds That Would Not Sit Still
The CME FedWatch tool priced a July hike at just 10.7% on July 15. By July 22, after West Texas Intermediate crude briefly traded above $100 a barrel on renewed Iran hostilities, that figure had more than tripled to 34.7%. It touched an intraweek high near 46.5% on July 24 before easing back to 35.4% on July 27 as diplomatic signals firmed, and it sat near 33% again this morning, even after Tuesday night's ballistic missile attack renewed the conflict. Three swings of roughly 25 percentage points inside two weeks is not normal pricing behaviour for a meeting most economists still expect to end in a hold.
The Number That Has Not Moved: September
The September odds tell a calmer and, for planning purposes, more useful story. CME FedWatch odds of a hike at the September meeting jumped from below 53% to roughly 82% in a single week as the same oil driven inflation data pushed the July odds around, and they have essentially held there since, sitting near 80% on Monday, Tuesday, and again this morning. Where the July odds have behaved like an asset reacting to every headline, the September odds have behaved like a market that made up its mind once and is waiting for confirmation.
Plotted against each other, the two probabilities show a market treating this afternoon's meeting as noise and September's as signal.
July 15's September reading reflects a sub-53% level described but not precisely quoted in contemporaneous coverage; all other points are as reported. Figures compiled across several outlets tracking the same CME FedWatch tool may differ by a point or two depending on the exact snapshot time.
What Macklem Already Told Markets About the Wider Gap
The Bank of Canada has its own stake in how today resolves. In its July 15 policy statement, the Governing Council noted that financial conditions in Canada have eased since April even as US bond yields have risen, and that the resulting gap between the two has contributed to the Canadian dollar's depreciation. The Canadian dollar traded at 70.91 cents US on Tuesday, essentially unchanged over the past week, but a hawkish surprise this afternoon, or firmer language pointing toward September, would widen the yield gap Macklem's own Governing Council has already flagged as the transmission channel to watch.
Canada's own policy rate has sat at 2.25% since before the start of this year, the sixth consecutive hold as of July 15, with unemployment steady at 6.5% in June and headline inflation easing to 2.8% that same month from 3.2% in May. The Bank's preferred core measures fell to their lowest level in more than five years. None of that gives the Bank of Canada a reason to move before its own next scheduled decision on September 2, two weeks ahead of the Fed's next meeting rather than after it.
Today's Second Data Point, at 1:30 P.M.
Ninety minutes after the Fed speaks, the Bank of Canada publishes its summary of deliberations from the July 15 decision, the account of what Governing Council actually debated before dropping its previous references to possible consecutive rate increases and to a rate cut contingent on new US tariffs. Both references had been in the Bank's language as recently as April. Their removal in July was read as a signal of comfort with holding steady through the rest of 2026, and this afternoon's summary should show how close a call that comfort actually was inside the room.