Bitcoin and cryptocurrency markets are entering the new week focused on the Fed’s interest rate decision. While expectations of keeping interest rates unchanged are strengthening in the marke
Bitcoin and cryptocurrency markets are entering the new week focused on the Fed’s interest rate decision. While expectations of keeping interest rates unchanged are strengthening in the market, the possibility of an interest rate hike at the last meeting of the year still remains.
The Federal Reserve’s decision from its meeting on October 27-28 will be announced on Wednesday, October 28, at 9:00 PM Turkish time. Fed Chairman Kevin Warsh will then address reporters at 9:30 PM to answer questions regarding the decision.
According to CME FedWatch data checked today, the probability of the Fed keeping its policy rate unchanged in the 3.75–4.00% range is 90.6%. A 25 basis point increase to the 4.00–4.25% range is priced in with a 9.4% probability. There are no expectations of a rate cut at this meeting.
The change over the past month reveals a shift in investor expectations. On September 25th, the probability of a rate hike at the October meeting was 64.2%, while the probability of keeping rates unchanged was only 35.8%. Today, the expectation of keeping rates unchanged has risen to over 90%.
The Fed raised interest rates by 25 basis points at its September meeting, a decision that was unanimous. In its statement, the bank noted that economic activity remained robust and inflation remained high. Therefore, at this week’s meeting, all eyes will be on what message the Fed will deliver following the September rate hike.
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Although a wait-and-see approach is likely at the October meeting, pricing for the end of the year paints a different picture.
According to CME FedWatch data, the probability of interest rates remaining above their current level after the December 9th meeting is calculated at a total of 74.2%. The probability of rates being in the 4.00-4.25% range is 67.5%, while the probability of them reaching the 4.25-4.50% range is 6.7%. The probability of them remaining in the current range is 25.8%.
Therefore, any signals Warsh gives regarding the December meeting will be watched as closely as the interest rate decision itself.
PIMCO, one of the world’s leading asset managers, also stated in its analysis dated October 22nd that it expects the Fed to keep interest rates unchanged at this meeting. However, the institution assessed that the Fed may maintain its interest rate hike trend and that the next step could be a 25 basis point increase in December.
PIMCO highlighted several key issues, including AI investments supporting demand, tariffs, and energy-related inflation risks. Conversely, rising long-term bond yields tightening financial conditions could give the Fed room to maneuver.
No new economic forecasts or dot charts showing interest rate expectations will be released at this meeting. Therefore, changes to the decision text, any dissenting votes, and Warsh’s press conference will carry more weight.
From the perspective of cryptocurrency markets, it will be particularly important to watch how strongly a new rate hike remains on the agenda, especially in December. Warsh’s statements, which leave the door open for further tightening, could increase pressure on Bitcoin via the dollar and bond yields. Conversely, a stronger message of waiting could boost investor risk appetite.
Moreover, the busy agenda won’t end with the interest rate decision. The September personal income and spending report, which includes the PCE inflation indicator closely watched by the Fed, will be released on Thursday, October 29th.
*This is not investment advice.
Continue Reading: Attention Bitcoin Investors: Fed Week Begins! Big Changes in Interest Rate Expectations!
