In a conversation with Zee Business, market analyst Ajay Bagga said that there is a 98 per cent probability that the US Federal Reserve may hike interest rates by 75 basis points, while 2 per cent chances are that they may resort to a rate may hike of 100 basis points. (100 basis points = 1 per cent). 

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The US Fed Reserve began its two-day (June 14-15) policy meeting on Tuesday amid a blistering inflation surge that has ignited predictions that the Federal Reserve will increase the interest rate hike. 

The market analyst said more than a rate hike, the key monitorable would be how hawkish US Fed may sound for future roadmap. He added the market reads between the line as if unemployment increases by the year end,  then Fed is compromising with the inflation. 

Bagga believes that today’s rally will likely be a relief bounce. He added during the quarter-end, an option settlement take place and we see a bounce in the middle of quarter as it happened in March, December and September.  

A Fed spokesperson confirmed the meeting of the policy-setting Federal Open Market Committee began as scheduled at 1500 GMT. Markets will get the rate decision on Wednesday at 1800 GMT. 

Officials will debate how high to raise borrowing costs amid surging prices and fears of a bout of 1970s-style stagflation if their efforts to cool the economy clamp down on growth as well. 

After dropping the rate to zero since March 2020 in a successful bid to help the world's largest economy avoid a devastating downturn and recover quickly from the impact of the Covid-19 pandemic, the Fed has raised rates twice, including a big, half-point increase last month.