The Federal Reserve is scheduled to announce its interest rate decision on Wednesday, September 16, with markets assigning a roughly 93 percent probability of a quarter-point hike in the federal funds rate. The current target range stands at 3.5 percent to 3.75 percent following the July meeting, where policymakers left rates unchanged in a 9-3 vote.

Wall Street will also focus on the August retail sales report due the same day. Economists expect a rebound of 0.8 percent after a 0.6 percent decline in July. Core sales excluding autos are forecast to rise 0.6 percent. Recent data showed mixed consumer spending trends, with some segments like clothing posting gains while overall figures reflected pullbacks in certain categories.

Inflation remains above the Fed's 2 percent target. August core CPI came in slightly hotter than expected, and energy prices have added pressure. Several Fed officials have signaled openness to tightening if price stability appears threatened. Primary dealers are split on whether rates will stay on hold for the remainder of the year.

The September meeting includes updated economic projections and a dot plot, which will clarify policymakers' views on the path ahead. A hike would mark the first since 2023 and reflect concerns over persistent inflation amid solid economic activity.

Retail sales data will provide fresh insight into consumer resilience. Stronger-than-expected figures could reinforce arguments for higher rates, while weakness might support a hold. Investors are watching both releases closely for signals on monetary policy direction.