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All eyes are on the U.S. Federal Reserve today as it prepares to announce its latest interest rate decision. The Federal Open Market Committee (FOMC) will release its policy update at 2:00 p.m. Eastern Time, followed by a press conference from Federal Reserve Chair Jerome Powell at 2:30 p.m. ET.
Markets widely expect the Fed to keep interest rates unchanged, with current expectations showing a 97% chance of no rate move. While some policymakers support cutting rates to ease borrowing costs, others prefer to keep them steady, pointing to persistent inflation and a strong U.S. economy.
Is Fed Likely to Hold Rates Steady
Market expectations suggest that a rate cut would be a positive development for risk assets, including cryptocurrencies. According to Polymarket, traders are currently pricing in a 70% probability of a 25-basis-point rate cut. However, if rates remain unchanged, market sentiment could turn sharply negative.
As per the Fed Rate Monitor Tool by Investing.com, there is a 97.7% probability of a rate pause, while the likelihood of a rate cut stands at just 2.3%.
Recent economic data supports the case for no immediate policy change. U.S. CPI inflation remained flat at 2.7%, while the Fed’s preferred gauge, PCE inflation, edged higher to 2.8%. At the same time, labor market data has largely come in better than expected, showing resilience despite disruptions caused by the 2025 government shutdown.
Former Federal Reserve Vice Chairman Roger Ferguson said policymakers are likely to remain patient.
“The economy continues to show underlying strength, with durable goods orders holding up and unemployment remaining relatively low,” Ferguson noted, adding that inflation is still above the Fed’s 2% target.
These conditions give the Fed more flexibility to delay rate cuts until it has clearer evidence that inflation is moving sustainably lower.
Powell Expected to Strike a Familiar Tone
We do not expect major surprises from Chair Jerome Powell’s press conference. He is likely to reiterate that policy decisions will remain data-dependent, without committing to a near-term rate cut.
Chris Larkin, Managing Director at E*TRADE from Morgan Stanley, believes politics could play an outsized role in the headlines.
“Even though the Fed isn’t expected to cut interest rates, Powell’s press conference may be as much about Fed independence as it is policy,” Larkin said.
FED Rate Cut Forecast for 2026 Remains Uncertain
Looking beyond today’s meeting, forecasts for 2026 rate cuts remain mixed.
Goldman Sachs expects U.S. growth to accelerate to 2–2.5% in 2026, driven by easing financial conditions and tax cuts. Chief economist Jan Hatzius sees the Fed pausing in January, followed by rate cuts in March and June, potentially lowering rates to 3–3.25%.
J.P. Morgan, however, takes a more cautious stance, projecting the Fed will hold rates steady through 2026, with a possible rate hike in 2027 if inflation remains sticky.
TD Securities’ chief U.S. macro strategist Oscar Munoz believes easing is still on the table.
“While Powell may sound noncommittal in the near term, the median Fed official still looks for easing this year,” Munoz wrote.
Bitcoin and Risk Assets Face FOMC Volatility
While today’s decision may appear uneventful, history suggests FOMC meetings often trigger sharp moves in Bitcoin and other risk assets.
According to data shared by Ali Charts, Bitcoin declined after seven of eight FOMC meetings in 2025, with losses ranging from 6% to 29%. The most recent meeting saw BTC fall 9%.
The pattern highlights that even when markets price in optimism ahead of Fed meetings, the post-announcement reaction has frequently leaned bearish.
Liquidity Signals Could Shift the Narrative
Former BitMEX CEO Arthur Hayes pointed to growing stress in Japan’s bond market as a potential wildcard. He noted that a weakening yen alongside rising Japanese government bond yields could prompt intervention by U.S. authorities.
“Such intervention would effectively inject liquidity,” Hayes said, adding that it could ease pressure on U.S. Treasury yields and provide short-term support for risk assets, including Bitcoin.
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FAQs
The Fed releases its interest rate decision at 2:00 p.m. Eastern Time, followed by Chair Jerome Powell’s press conference at 2:30 p.m. ET.
No. Markets overwhelmingly expect the Fed to hold rates steady, with more than a 97% probability priced in for a pause.
FOMC decisions often trigger volatility in crypto, with Bitcoin frequently seeing sharp moves even when rates are left unchanged.
Outlooks are mixed. Some analysts expect gradual cuts, while others see rates staying higher if inflation remains persistent.
