Fed Rate Decision: What Markets and Bitcoin Traders Can Expect

The Federal Reserve will announce its rate decision today at 2 p.m. ET, with traders viewing a hold as highly probable.

Futures and prediction markets show the probability of a hold is above 90%. The target range stands at 3.75%-4.00% following the 12-0 hike in September. This follows September inflation at 3.7% and oil pricing near $100 a barrel.

The federal funds rate, which dictates the cost of overnight lending between banks, establishes the baseline for consumer credit costs. This rate was set at 3.75% to 4.00% after the unanimous 12-0 vote in September, its first increase since 2023.

Labor Department data reported that consumer prices increased by 3.7% over the 12 months ending in September. Furthermore, gasoline saw a 9.1% rise that month. Job additions slowed, with employers adding only 29,000 jobs in September, against forecasts near 90,000, while the unemployment rate remained at 4.2%.

Oil's influence on inflation is significant, with the U.S.-Iran conflict constraining global supply and keeping crude near $100 a barrel. Higher inflation compels investors to demand greater interest for government lending, thereby increasing Treasury yields. The 10-year yield, which influences mortgage rates, is currently near 5%, down from a high of 5.31% on Oct. 5.

Bitcoin is trading near $80,700, positioned below a zone where sellers have repeatedly halted rallies this year. Because Bitcoin yields no return and is volatile, capital often shifts from riskier assets like crypto and stocks when Treasuries offer higher payments.

Traders are currently focusing on December, where futures and prediction markets assign 75% to 80% odds to another quarter-point hike during the Dec. 8-9 meeting. Minutes from the September gathering indicated most officials believed another increase would likely be appropriate by year-end, with several stating the current rate was "not restrictive or only mildly restrictive."

Analysts suggest the probable outcome is a "hawkish hold," meaning rates remain unchanged while the language suggests future increases are possible. Fed Chair Kevin Warsh stated in September, "I’m not going to prejudge any future decisions we make," and added, "This won’t surprise you: I’m not in the forward guidance business."