Fed Rate Decision: What Markets and Bitcoin Traders Can Expect
The Federal Reserve is widely expected to keep interest rates unchanged at 3.75%-4.00% when it announces its decision at 2 p.m. ET today, with markets putting the odds of a hold above 90%.
The decision reaches well beyond Wall Street because the federal funds rate sets the baseline for what consumers pay on credit cards and loans. Consumer prices rose 3.7% in the 12 months through September, with gasoline jumping 9.1% in that month alone. Hiring is slowing, with employers adding just 29,000 jobs in September against forecasts of about 90,000, while the unemployment rate stood at 4.2%.
Inflation drivers
Oil is a major driver of current inflation, trading near $100 a barrel because the U.S.-Iran war has squeezed global supply. Pricier crude lifts gasoline and shipping costs, which eventually show up on grocery shelves and push inflation higher. This environment makes investors demand more interest for lending to the government, lifting Treasury yields that mortgage rates follow.
Bitcoin impact
The 10-year yield is hovering around 5% after peaking at 5.31% on Oct. 5, offering a nearly risk-free return without owning anything volatile. Bitcoin pays no yield and is very volatile for traditional investors, so when Treasuries pay more, money tends to drift out of riskier assets such as crypto. The price of Bitcoin sits around $80,700, just below a key technical zone.
December outlook
Traders now appear focused on December, where futures and prediction markets give 75% to 80% odds on another quarter-point hike at the Dec. 8-9 meeting. Minutes from September's meeting show most officials judged another increase would likely be appropriate by year-end. Analysts are calling the likely outcome a "hawkish hold," meaning rates stay put while the tone leaves more hikes on the table.
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