Market participants are pricing only 2% chance that there will be a 25 basis points hike today and first hike to come only in September.

However, in reality, we feel there is quite a good chance that rates will be hiked by 25 basis points before September, even today. While June seems more logical, high risk British referendum just eight days before FED makes a good case for hike today.

U.S. benchmark stock index has recovered completely from early-year slump and now S&P 500 is up 1.5% for the year. Similar trend is prevailing global stock market. Even vulnerable emerging markets have rallied more than 22% from its bottom in February.

Dollar index is much weaker compared to last year. Down -4.3% YTD. That means U.S. import cost will be going up.

Oil price, which have been suppressing inflation is up close to 20% YTD.

Industrial metals like iron ore is up around 90%, from its bottom in December. Steel price is at highest since September 2014. Industrial barometer, copper is up 4.2% YTD.

According to Goldman Sachs’ financial condition index, stress have eased more than 100 basis points and now lowest in almost a year. Similarly, 10 year break-even inflation rate is hovering at 1.65%, highest since August last year.

So, it is more likely that FOMC hawks will have lots of strong arguments to call for a tightening at today’s meeting.

Even if FED stops short of a hike, expect more dissenters in today’s voting. In March Esther George was the once to dissent and call for a hike.

Dollar index, which has been hovering  close to support may gain grounds post meeting. Currently trading at 94.36