Those 25 basis points from last night have landed.
The Federal Reserve unanimously approved a 25-basis-point rate hike. The target range for the federal funds rate was raised from 3.50%–3.75% to 3.75%–4.00%. It was the first rate hike since 2023. Ahead of the meeting, the CME FedWatch reported the probability at about 93%, and the market had already priced it in.
What really stings is the dot plot. Fed Pulse: Among 18 officials who submitted forecasts, 16 said another rate hike is still needed this year; 12 favored cumulative hikes of 50 basis points in 2026, while 4 favored 75 basis points. Six officials said rates should stay unchanged for the full year or that there should be a rate cut—by June, there were nine; this time, it all fell to zero. The median puts the year-end interest rate at about 4.1%, and in 2027 it remains around 4.1% as well. The median PCE inflation expectation was revised up to 3.7%, with core PCE to 3.4%. The unemployment rate forecast, however, was revised down to 4.1%. When the economy is a bit stronger and inflation is higher, officials follow this line.
At a press conference, Kevin Warsh said it plainly: inflation is still too high—this time in order to return to the 2% target more promptly. Reuters paraphrased his remarks: in essence, he found it hard to say that current broad financial conditions are already too tight, so the committee “removed some of the accommodation.” He also repeated: “Inflation is the problem.” He still didn’t publish the dot plot himself, but paraphrased based on the median: most colleagues think it’s appropriate for the year-end rate to be 4.1%, and next year as well, it remains around that level.
Bitcoin first dipped then rebounded. According to a report by the company Yidong, citing HTX: after the rate-hike announcement, it jumped from around 75,500 to about 76,500. During Warsh’s remarks, it wiped out some gains and even touched roughly 75,000; then within the next seven minutes it rebounded by about 1.67%, returning to around 76,300. Coinbase spot is currently about $76,320; HTX’s near 24-hour high is around 76,572 and low around 75,050. In the short term, markets are more sensitive to officials’ wording than to the rate hike itself.
The takeaway is one sentence: stop using “whether they’ll hike or not” as a signal. This move has already been priced in; the dot plot has written a second rate hike into the baseline path, and Warsh also doesn’t accept that financial conditions are already tight enough. Going forward, watch the pricing for the October meeting and the long-end U.S. Treasuries—not an overnight candlestick chart.
Not investment advice.