The Fed held interest rates at 3.75% to 4% on Wednesday, exactly as markets had priced in. That calm headline hides the real question, because the fight now moves to December and to what Chair Kevin Warsh says at his press conference.
Key points:
- No surprise in the headline. The Fed kept rates at 3.75% to 4%, the same range set by September's quarter-point hike.
- Inflation is still the problem, with September prices running 3.7% higher than a year earlier, well above the Fed's 2% goal.
- December is now the main event, with markets putting roughly three-in-four odds on another hike by year-end.
My own read is this. A hold this widely expected never moves markets on its own. The decision only matters because it keeps December live, and Warsh's words will decide whether traders keep betting on a hike or start doubting it.
The Fed is stuck between two problems. Prices are still rising too fast, with September inflation at 3.7%, up from 3.4% in August, while hiring has gone soft, with September payrolls up just 29,000. September's hike was the Fed's first since 2023, and it brought rates to the range they sit in today. The vote to hold was 10-2. Bitcoin traded flat just above $80,000 into the decision, after dipping under $80,000 the day before, which tells you traders had already braced for a hold and were waiting for the words that come next. Once the decision was out, Bitcoin climbed to $81,000.
Read also: Bitcoin ETFs Add $176M as October Outflows Shrink to $26M
What does this mean for December?
December is where the money is now. Prediction markets put the odds of another hike by year-end at roughly three in four, and futures markets point the same way. This meeting brought no new economic forecasts from the Fed, so Warsh's press conference carries even more weight than usual. He speaks at 2:30 p.m. Eastern, and traders will hang on every hint about whether December stays on the table. Fresh GDP and inflation data land on Thursday too, so Bitcoin faces two more volatility triggers within a day of the decision.
So the hold is done, but the real answer is still coming. Listen to Warsh. One hawkish line about December, and the calm in Bitcoin will not last long. Will he keep the hike on the table, or talk it down?
Read also: Bitcoin ETFs: 9 Big Firms Cut 68,000 BTC as Sovereign Funds Bought In
— BitByLine News Desk
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Sources: CoinDesk