September 16’s FOMC raised the federal funds rate by 25 bps to 3.75%—4.00%, with 12 votes in favor and 0 against. This was the first rate hike since July 2023, and also the first since Chair Powell took office.
So whether “a rate hike is already a foregone conclusion” needs to be viewed in two layers. The first layer is already settled: the market had priced in a probability of over 90% ahead of the meeting—the shoe really did drop. The second layer is completely unsettled: whether this is the start of a continuous rate-hiking cycle.
The guidance contains clearly hawkish elements. Of the 18 officials, 12 expect one more hike this year, four expect two more, and no one forecasts a rate cut this year. The year-end rates forecast median was raised from 3.8% to 4.1%; the long-run neutral rate expectation was raised from 3.1% to 3.2%. The economic forecasts were revised upward as well—core PCE for 2026 was raised to 3.4%, and the timeline for inflation to return to the 2% target was pushed back to 2029. The statement also removed the wording “high inflation is driven by supply shocks,” replacing it with “domestic spending remains resilient,” effectively acknowledging that the demand side also has responsibility.
The split among sell-side analysts is even more worth watching. One camp believes December will be the next meaningful battleground, with the baseline case being another hike. The other camp argues there is no fundamental basis for a continuous, significant tightening cycle—unless oil prices run out of control—and notes that October is likely to see a pause due to pressure from midterm elections, limiting cumulative upside to only 50—75 bps. Market pricing is broadly aligned with the dot plot.
My inclination: the sentence “the time for inflation to return to 2% is delayed to 2029” is more important than those 25 bps. It means the idea of “higher-for-longer rates” has shifted from a trading assumption into an official narrative. For assets with extremely long duration like $BTC , the pressure on the denominator side won’t disappear just because a single hike has been executed.
What do you think—this is a technical move to roll back part of the easing, or the opening act of a new tightening cycle? #Is the FOMC rate hike already a foregone conclusion?
So whether “a rate hike is already a foregone conclusion” needs to be viewed in two layers. The first layer is already settled: the market had priced in a probability of over 90% ahead of the meeting—the shoe really did drop. The second layer is completely unsettled: whether this is the start of a continuous rate-hiking cycle.
The guidance contains clearly hawkish elements. Of the 18 officials, 12 expect one more hike this year, four expect two more, and no one forecasts a rate cut this year. The year-end rates forecast median was raised from 3.8% to 4.1%; the long-run neutral rate expectation was raised from 3.1% to 3.2%. The economic forecasts were revised upward as well—core PCE for 2026 was raised to 3.4%, and the timeline for inflation to return to the 2% target was pushed back to 2029. The statement also removed the wording “high inflation is driven by supply shocks,” replacing it with “domestic spending remains resilient,” effectively acknowledging that the demand side also has responsibility.
The split among sell-side analysts is even more worth watching. One camp believes December will be the next meaningful battleground, with the baseline case being another hike. The other camp argues there is no fundamental basis for a continuous, significant tightening cycle—unless oil prices run out of control—and notes that October is likely to see a pause due to pressure from midterm elections, limiting cumulative upside to only 50—75 bps. Market pricing is broadly aligned with the dot plot.
My inclination: the sentence “the time for inflation to return to 2% is delayed to 2029” is more important than those 25 bps. It means the idea of “higher-for-longer rates” has shifted from a trading assumption into an official narrative. For assets with extremely long duration like $BTC , the pressure on the denominator side won’t disappear just because a single hike has been executed.
What do you think—this is a technical move to roll back part of the easing, or the opening act of a new tightening cycle? #Is the FOMC rate hike already a foregone conclusion?