John Williams, vice chair of the Federal Open Market Committee, stated that the Federal Reserve has no immediate need to raise interest rates in October. He emphasized that the committee has sufficient time to collect additional economic data following the quarter-point rate hike implemented on September 16.
Market expectations for an October rate increase have shifted significantly. According to the CME FedWatch tool, the probability of a hike has fallen below 50%, down from over 70% recorded last week. Despite this, Williams noted that inflation at 3.7% remains too high and suggested that another rate increase could be appropriate later this year.
Federal Reserve Governor Michael Barr expressed a different perspective, suggesting that further policy adjustments are likely necessary to reach the 2% inflation target. Barr noted that increased spending on artificial intelligence is contributing to higher chip prices, which adds pressure to the current economic environment.
The potential for future rate hikes remains a factor for risk assets like Bitcoin. While Bitcoin rose 13% following the September rate decision, its price growth has slowed to 0.2% over the last 24 hours. Investors are now awaiting the release of August PCE inflation data, which could influence market sentiment and future Fed policy decisions.
