No Interest Rate Hike Expected in October!
According to a Reuters poll conducted between October 16-20, 94% of economists predict the Fed will keep interest rates unchanged in October. Therefore, the interest rate is expected to remain in the 3.75-4.00% range.
Economists note that Fed officials prefer a cautious and gradual approach to interest rate policy despite inflationary pressures. However, according to economists, high prices keep the possibility of a new tightening of monetary policy on the agenda.
All Economists Point to December!
The most striking result of the survey was that all 100 economists surveyed expect a 25 basis point interest rate increase in December. In this context, economists agreed that although the Fed preferred to wait at its October meeting, it will raise interest rates again at its final meeting of the year.
Approximately 60% of economists believe the policy interest rate will peak in the 4.00-4.25% range. In contrast, 38 out of the 92 economists surveyed predict at least two additional interest rate hikes.
Speaking to Reuters, Alex Pelle, Chief US Economist at Mizuho Bank, stated that the economy is strong and inflation is rising, adding that “the Fed’s decision not to raise interest rates in October was a wrong decision.”
Inflation and Energy Prices Will Be Decisive Factors!
According to economists, inflation in the US remaining above the Fed’s 2% target is among the key factors strengthening expectations of interest rate hikes. High energy costs and new tariffs on imports are also increasing price pressures.
At this point, economists believe that the Fed may pursue a tighter monetary policy in the coming period, depending on the persistence of inflation and the trajectory of economic growth. However, interest rate decisions are expected to be shaped by the economic data to be released and the Fed’s assessments.
How Could Fed Interest Rate Expectations Affect Bitcoin?
The strengthening expectation that the Fed may raise interest rates in December is being closely watched in terms of risk appetite in the cryptocurrency markets. The expectation that interest rates will remain high for longer could lead to a strengthening of the dollar and bond yields, putting pressure on Bitcoin and other cryptocurrencies. However, market pricing and statements from Fed Chairman Kevin Warsh could be as decisive as the interest rate decision itself. Therefore, investors are closely following the decision and press conference to be announced on October 28th.
*This is not investment advice.
