Earlier, most economists expected the Fed to keep rates unchanged because inflation was easing and the U.S. midterm elections were approaching. Only 13 of 48 economists expected a hike this month.
But hotter inflation has changed the outlook. U.S. inflation came in slightly hotter than expected, driven by stronger core prices. On a yearly basis, CPI rose 3.4%, matching expectations, while core CPI stood at 2.4%, also in line with forecasts.
Chief economist Heather Long said a September hike is now “almost locked in,” as the risk of inflation staying high continues to grow.
A September Fed rate hike is almost locked in now
85% chance the Fed hikes next week.
It’s the right call.
The risks are growing that inflation remains entrenched (or keeps broadening). Fed Chair Warsh doesn’t want to make the same mistake Powell did of waiting too long to… pic.twitter.com/RdGcjhTP4G— Heather Long (@byHeatherLong) September 11, 2026
That would be the first Fed rate increase in three years.
Markets Now Expect Three Fed Rate Hikes
Meanwhile, traders now see at least three rate hikes through June 2027, up from two previously, with a base case of four hikes by July 2027.
That is a major shift from the start of 2026, when markets were pricing in four rate cuts over the same period.
Former Fed Vice Chair Richard Clarida said, “If we get a hike next week, certainly we’ll get additional ones.” He added that it would not be a “one and done” move.
The shift points to a higher-for-longer rate outlook as investors prepare for the Fed to keep fighting inflation.
What Could a Fed Hike Mean for Bitcoin?
Higher interest rates usually make riskier assets less attractive because investors can earn more from safer assets such as government bonds. That can reduce the money flowing into Bitcoin, Ethereum, and other cryptocurrencies.
Bitcoin and Ether moved higher after the data, with Bitcoin briefly approaching $77,500 while Ether climbed above $2,511.
