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Fed faces a tough July decision as cooling inflation clashes with rising oil price concerns.
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CME FedWatch shows 64% odds of no change and 35% chance of hikes.
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Citadel expects a rate hike, while JPMorgan sees no Fed cuts throughout 2026.
The Federal Reserve is set to announce its next interest rate decision on July 29, with participant “No Change.” Citadel Securities expects the Federal Reserve to raise interest rates.
Bitcoin has fallen around 3% as investors reduce risk ahead of the Fed’s rate decision.
64% Chance Fed To See “No Change”
The Federal Open Market Committee is holding its two-day meeting, with the rate decision due tomorrow. the Fed some room to keep rates unchanged, as inflation cooled to 3.5% from 4.2% in May.
However, the recent rise in oil prices has complicated the outlook. Renewed U.S.-Iran tensions and the breakdown of the ceasefire have raised concerns that higher energy prices could push inflation higher again.
Because of this, markets are no longer fully confident that the Fed will keep rates unchanged.
CME FedWatch currently shows a 64% chance of no change and a 35% chance of a 25-basis-point hike.
Citadel Securities has taken a more hawkish view. Frank Flight, the firm’s head of macro strategy, expects the Fed to raise rates tomorrow.
“The market may once again be underestimating the extent of the hawkish shift at the Fed.”
Hike expectations have nearly tripled over the past week, while traders now see an 81% chance of a hike by September.
Meanwhile, the Fed is expected to hold rates tomorrow and make no cuts for the rest of 2026.
Kevin Warsh Gives No Clear Signal on July Rate Cut
Fed Chair Kevin Warsh has made inflation control a key focus, but his recent comments have not given markets a clear signal about a July rate cut.
In June, he said the Fed has “no tolerance for persistently elevated inflation” while also pushing for less forward guidance, making the next move harder to predict.
Perhaps, Prediction markets such as Polymarket put the odds of a rate hike at 24.65%, while 75% of traders expect no change.
How Will Crypto React to the FOMC Decision?
Bitcoin and the wider crypto market are already showing signs of caution ahead of the decision.
The total crypto market cap has dropped around 3% to $2.17 trillion, while Bitcoin recently fell to about $63,414. The Crypto Fear and Greed Index has also slipped to 34, showing growing fear among traders.
Large cap altcoins including Ethereum, XRP, Solana and Doge are seeing a 3%-5% decline.
However, a rate hold could bring some relief.
