FOMC Decision Today: Markets Price 92% Odds of a Hike to 3.75% – 4.00%

The United States Federal Reserve (Fed) is set to release its interest rate decision today at 2 p.m. ET, and financial markets have largely priced in the outcome. Based on the CME FedWatch tool, there is a 92.3% probability of a 25 basis point hike, which would lift rates to a range of 3.75% and 4.00%. A rate increase today would represent the first one since 2023.

Market forecasts looked entirely different a month ago, when roughly 36% of market participants anticipated a hike prior to the Jackson Hole symposium. Fed Chair Kevin Warsh shifted those projections after stating that inflation had not “meaningfully improved,” driving the odds past 50% within days. Expectations for a rate hike surged further following the release of August’s Consumer Price Index (CPI) report, which effectively ended the debate.

August Inflation Came in Hot and Energy Did the Damage

Ahead of August, core CPI was projected to rise 0.3% month-over-month, but it climbed to 0.3%. Meanwhile, headline inflation stayed at 3.4% year-over-year, remaining far from the Fed’s 2% objective. AAA fuel price data indicates that national average gas prices have jumped approximately 36% over the past year. Crude oil has also moved back above the $100 threshold as disruptions in the Strait of Hormuz persist, squeezing shipping lanes affected by the Iran conflict.

Strong labor market metrics followed, leaving policymakers little reason to delay action. Employers added 162,000 payroll jobs in August, and the Bureau of Labor Statistics reported the unemployment rate at 4.1%.

Crypto Walked Into Today Already Bruised

The total cryptocurrency market capitalization dropped roughly 3.3% on Tuesday, September 15. Bitcoin slipped below $76,000 to hit its weakest level since August 21. According to Coinglass, more than $545 million in long positions were liquidated during yesterday’s downward slide.

Interest rate expectations are only part of the catalyst behind the drawdown. In the Senate, the CLARITY Act failed a cloture vote 49 to 50 yesterday, stalling the market structure legislation and removing a near-term narrative traders had relied upon. In addition, spot Bitcoin exchange-traded funds (ETFs) experienced $462.73 million in outflows last week, reversing course after bringing in $3.52 billion over the course of August.

Market positioning ahead of a rate announcement is rarely this one-sided. Leverage was cleared out prior to the event rather than during it, implying there will likely be fewer forced sellers if the announcement generates a negative reaction.

The Hike Is Priced, so the Volatility Lives Elsewhere

With a 25 basis point adjustment completely priced in, the decision itself approaches non-event status. Price action will instead be driven by accompanying documents and statements.

The revised dot plot and Summary of Economic Projections (SEP) will indicate whether this move is a singular adjustment responding to an energy shock or the beginning of an extended tightening cycle. The dissent count will also be closely watched; a unanimous vote carries a very different implication than a 9-to-3 split featuring governors challenging the inflation outlook.

Market participants will also focus on Warsh’s remarks at 2:30 p.m. ET, specifically listening to whether December remains in play for another hike. Any indication that the Fed contemplates a second rate increase before the end of the year would weigh more heavily on risk assets than today’s policy shift.

$70,000 is the level traders are watching

Bitcoin faces its next major technical test at the $70,000 mark. This threshold holds significance beyond its status as a round number, as it aligns with a dense cluster of historical price action from throughout the current cycle and sits near the 200-day moving average—a key level that has alternated between support and resistance multiple times over the last two years.

Maintaining a position above this line preserves the existing market structure. Conversely, a daily close beneath it alongside ongoing ETF outflows would expose the asset to a much broader downside range.

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