Fed rate call splits markets for first time in six years
Macro & Markets ·
The FOMC's decision today carries unusually wide uncertainty, with futures markets assigning up to a 38% probability to a surprise hike even as most analysts still expect no change.
The Federal Open Market Committee opened its two-day meeting on July 28 and will release its rate decision at 2:00 p.m. ET, followed roughly 30 minutes later by a press conference from Chairman Kevin Warsh. The benchmark rate currently sits between 3.50% and 3.75%. According to CryptoPotato, the Kobeissi Letter has noted that nearly every FOMC meeting since March 2020 has gone into decision day with close to 99% agreement on the outcome, making the current split among the most divided in over six years.
Part of the uncertainty traces back to Warsh's move to pull back on forward guidance. Minutes from the June meeting show policymakers weighing a shorter statement and dropping language that hints at the next likely move, a shift meant to preserve flexibility but one that has left traders without the clearer signals they had grown used to previously. Despite this, a Reuters survey of over 100 forecasters found more than three-quarters expecting rates to hold through year-end, a view echoed by ING economists and the Kobeissi Letter, largely on the back of softer June inflation figures and a cooling labor market.
Not everyone agrees rates should stay put. Inflation remains above the Fed's 2% target, and renewed geopolitical strain, tariffs, and energy-market swings could reignite price pressure. Some Fed officials have reportedly grown more willing to consider a hike if inflation fails to ease, and since Warsh has not laid out a clear policy path in advance, a surprise increase cannot be ruled out simply because markets weren't primed for one.
Bitcoin has been trading the uncertainty directly. The asset fell by $3,000 in a de-risking move the day before the meeting and has since recovered about half of that decline. Santiment Intelligence tracked a spike in social-media chatter about rate hikes ahead of the meeting, similar to a pattern seen before the June 16 decision, when the Fed ultimately held rates steady despite the noise. Santiment cautioned that crowd conviction tends to get loud right before it proves wrong, particularly when traders try to price Fed uncertainty into Bitcoin.
What remains unresolved is whether Warsh's statement and press conference will restore some directional clarity or deepen the ambiguity that has built up since June. Bitcoin's next move is expected to hinge on both the rate decision itself and the tone Warsh sets in the minutes that follow.