The Fed is only willing to signal once again, but the market is already pricing in three. The gap between them—that’s the real news today.
25 bps is not surprising. What’s unexpected is the dot plot. Of the 16 members, most believe there will be at least one more rate hike in 2026, with the median coming in at 4.1%. Waller says the economy is strong and jobs are steady, yet also says inflation is too high, policy has been on hold for too long, and there’s no confidence about returning it to 2%. Translated into one sentence: don’t expect easing.
But traders clearly don’t buy this expectation management; they’ve already priced in another three rate hikes next year. At 25 bps each, the policy rate midpoint would need to reach above 4.5%.
One side only dares to signal once; the other side is rushing to bet on three. Yet the crypto market is calm: BTC is up slightly—$76k, +0.62%—and ETH is basically flat around $2.4k. This calm either means the bearish risk has fully played out, or it means nobody has truly translated the dot plot into a “withdrawal” move.
I’m more inclined to believe the latter. Once it’s realized, $76k won’t be a floor—it’ll be a speed bump.
25 bps is not surprising. What’s unexpected is the dot plot. Of the 16 members, most believe there will be at least one more rate hike in 2026, with the median coming in at 4.1%. Waller says the economy is strong and jobs are steady, yet also says inflation is too high, policy has been on hold for too long, and there’s no confidence about returning it to 2%. Translated into one sentence: don’t expect easing.
But traders clearly don’t buy this expectation management; they’ve already priced in another three rate hikes next year. At 25 bps each, the policy rate midpoint would need to reach above 4.5%.
One side only dares to signal once; the other side is rushing to bet on three. Yet the crypto market is calm: BTC is up slightly—$76k, +0.62%—and ETH is basically flat around $2.4k. This calm either means the bearish risk has fully played out, or it means nobody has truly translated the dot plot into a “withdrawal” move.
I’m more inclined to believe the latter. Once it’s realized, $76k won’t be a floor—it’ll be a speed bump.