The Federal Open Market Committee is concluding a two-day meeting this Wednesday, with the CME FedWatch tool indicating a 94.5% probability of a 25-basis-point interest rate hike. This move would raise the federal funds rate to a range of 3.75% to 4%.
A survey by The Wall Street Journal shows that nearly all major banks, including JPMorgan, Citigroup, and UBS, anticipate this increase. Most analysts expect a total of 50 basis points of tightening by the end of the year, while Bank of America, Deutsche Bank, and RBC project 75 basis points.
The decision follows inflation data showing headline CPI at 3.4% annually in August, exceeding the Fed's 2% target. Additionally, the 10-year Treasury yield reached 5.04% this week, marking its highest level since July 2007, as markets adjust to the expectation of higher rates.
The potential hike creates political tension, as President Donald Trump has publicly pressured Fed Chair Kevin Warsh to lower rates. Warsh maintains that the administration has not influenced Federal Reserve decisions.
Bitcoin is currently trading under pressure, recently falling to approximately 75 700 USD following the failure of the Clarity Act in the Senate. Analysts note that higher interest rates typically reduce the appeal of risk assets like cryptocurrencies.
