Preview: The Federal Reserve is set to announce its interest rate decision tonight, with another rate hike once again becoming the market's baseline expectation, and whether the logic of economic policy has shifted is in the spotlight.

BlockBeats news, September 16 — The Federal Reserve's FOMC will announce its interest rate decision and summary of economic projections at 2 AM Beijing time on Thursday, followed by a monetary policy press conference held by Fed Chair Warsh. According to CME FedWatch data, the market's current pricing of a 25 basis point rate hike by the Fed this week has risen to 95%, and the probability of a rate hike in December has also climbed to 70%.

Meanwhile, according to prediction market predict.fun data, the market currently sees an 88% probability that the Fed will decide to raise rates by 25 basis points tomorrow, with only a 12% probability of keeping rates unchanged.

A rate hike has once again become the market's baseline expectation. U.S. August job growth was stronger than expected, headline CPI rose to 3.4% year-over-year, and the energy price shock has added new uncertainty to the inflation outlook. At the same time, the 10-year U.S. Treasury yield is approaching 5%, and dollar credibility and Fed independence have re-entered the trading spotlight. But what this meeting truly needs to answer may not just be "hike or not," but whether the Fed's policy reaction function has already changed: the market previously believed the Fed would keep rates unchanged unless data forced it to tighten; now ING believes the baseline scenario has flipped to the Fed leaning toward hiking unless data is sufficient to make it pause.

ING Chief International Economist James Knightley, Head of U.S. Research Padhraic Garvey, and Global Head of Markets Chris Turner expect in their latest outlook that the Fed will raise rates by 25 basis points on September 16. But in their view, this is more likely a policy "recalibration" rather than the starting point of a new round of consecutive rate hikes.

TD Securities strategists, meanwhile, said they expect the Fed to launch the first of three rate hikes in this cycle in September, with a total of three hikes expected this cycle, and the latter two hikes to take place in October and January next year. The Fed may not provide forward guidance, but the dot plot should lean hawkish.