Fed faces 29% market probability of surprise 25 bps rate hike on July 29, down from 93% hold expectation a week prior, amid inflation and oil price concerns.
Macro & Markets ·
Markets are pricing a roughly 29% probability of a 25 basis point rate increase when the Federal Reserve announces its decision on July 29 at 2pm ET, a sharp shift from the 93% hold expectation recorded a week prior. Most economists continue to anticipate rates will remain at 3.50%–3.75%, yet inflation concerns and rising oil prices are sustaining elevated uncertainty around the outcome.
The Fed has held its benchmark rate at 3.50%–3.75% for five consecutive meetings, though some officials have indicated dissent in favor of a hike. A surprise rate increase would represent a significant policy departure and could create downward pressure on growth equities and digital assets. Bitcoin volatility is expected to intensify around the time of the central bank's announcement and subsequent press conference, with price movement anticipated in the $63,800–$64,000 range.
The outcome hinges on incoming data between now and the decision and the messaging provided during the post-announcement briefing. Whether the probability of a hike continues to shift or stabilizes in final hours remains to be seen.