Fed Seen Holding Rates at 3.75%-4.00% With Odds Above 90%

Hold Odds Above 90% for Wednesday's Decision

The Federal Reserve announces its federal funds rate decision at 2 p.m. ET on Wednesday, with rate-futures pricing placing more than 90% probability on the target range holding at 3.75%-4.00%. Prediction markets price the hold a few points higher still, and Chair Kevin Warsh faces reporters after the statement. The federal funds rate, what banks charge each other for overnight loans, sets the baseline for what consumers pay on credit cards and loans. That range sits at 3.75% to 4.00% after the Fed raised rates in September, its first increase since 2023, in a unanimous 12-0 vote.

The decision lands on an uncomfortable mix of data. Consumer prices rose 3.7% in the 12 months through September, and gasoline alone jumped 9.1% in the month. Hiring is slowing at the same time: employers added 29,000 jobs in September against forecasts of roughly 90,000, while the unemployment rate stood at 4.2%. Oil trading near $100 a barrel, squeezed by supply disruption from the U.S.-Iran war, feeds through to gasoline, shipping and grocery costs and keeps that inflation pressure in place.

The rates complex reinforces the caution. The 10-year yield, the benchmark mortgage rates follow, hovers around 5% after peaking at 5.31% on Oct. 5, according to the Treasury Department's daily yield-curve data. A nearly risk-free return of that size draws capital away from volatile assets, which is why even a fully expected hold shapes how money is allocated this quarter. The Fed publishes no new economic projections at this meeting; the next set arrives with the December decision.

December Hike Odds Near 80%

Bitcoin trades around $80,700, just below a zone where sellers have repeatedly stopped rallies this year, and the decision reaches it through two channels. The first is yield: bitcoin pays none, so a 10-year Treasury near 5% gives traditional investors a competitive return with far less volatility. The second is leverage, borrowed money used to make larger bets, which tends to exaggerate swings around Fed events. When a position moves against a leveraged trader, the exchange closes it automatically, and that forced selling adds to the pressure. After Warsh's Jackson Hole speech in August, about $481 million in crypto positions were liquidated within 24 hours, more than $360 million of them bets on higher prices. Liquidations of that scale cluster when order books thin around scheduled macro events, and the same setup applies to Wednesday's announcement.

The forward path carries more weight than today's outcome. Futures and prediction markets assign 75% to 80% odds to another quarter-point hike at the December 8-9 meeting. The Fed's minutes from September's meeting show most officials judged an additional increase would likely be appropriate by year-end, and several described the current rate as “not restrictive or only mildly restrictive.” Rates unchanged while the statement keeps further increases on the table is what the market calls a hawkish hold. Asked in September whether more increases would follow, Warsh said, “I'm not going to prejudge any future decisions we make,” adding, “This won't surprise you: I'm not in the forward guidance business.” The July vote was 9-3, with three members favoring a hike, so a dissent for tightening on Wednesday would suggest December is close to locked in.

Dissents Point to December

Our reading: the hold itself is already in the price, so the statement's vote count and Warsh's tone carry the day's information. Three dissents for tightening would confirm what futures imply, a roughly three-in-four chance of a quarter-point move on December 8-9. For crypto, the standing headwind is unchanged either way: a 10-year yield near 5% keeps the risk-free alternative competitive, and leverage still in the market after the Jackson Hole flush remains the amplifier if Warsh surprises. The range of press-conference outcomes is wide, since Warsh has repeatedly declined to give forward guidance. Trading volume around the 2 p.m. ET statement window will show whether positioning is being rebuilt or stays defensive into the December meeting.