At this point, we are pricing in a 0.25 percentage point probability of a 10% increase in interest rates in October, while the probability of rates remaining unchanged is priced at 90.6%. Conversely, the Fed is expected to make another interest rate hike at its final meeting in December.
Speaking to Bloomberg, Stephanie Roth, chief economist at Wolfe Research, said it was highly likely that the Fed would leave interest rates unchanged at its October meeting, in line with market expectations. However, noting that recent inflation data may have increased concerns among Fed officials, Roth added that the central bank’s statements could indirectly signal a desire to raise interest rates again.
However, there are disagreements among Fed officials about when to begin monetary easing. While Fed Vice Chairman Philip Jefferson and New York Fed President John Williams say there is enough time to evaluate economic data before making a decision, some regional Fed presidents point out that further tightening of monetary policy may be necessary due to continuing inflationary pressures.
How Will the FED Decision Affect Bitcoin?
Bitcoin may face a short-term correction if selling pressure increases. Comments from FED Chairman Warsh could influence Bitcoin’s direction. If Warsh signals a decline in inflation, the possibility of future interest rate cuts, or a less tight monetary policy – in other words, adopts a dovish tone – it could support an upward move. Conversely, if Warsh emphasizes that inflation is persistent, that new interest rate hikes are on the table, or that interest rate cuts are not imminent, it could increase selling pressure.
*This is not investment advice.
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