#FedRateWatch The 25 bps hike was expected. What happens after it is harder to price.
The Fed has now moved the federal funds target range to 3.75%–4.00%. The decision itself isn't the part I find most interesting. Markets had plenty of time to prepare for it.
The bigger question is whether this is an isolated move or the beginning of a more persistent tightening phase.
August inflation gives the Fed a reason to stay cautious. Headline CPI rose 0.4% month over month and 3.4% over the past year, while core CPI increased 0.3% in August and 2.4% year over year.
But there is an important distinction here.
Higher rates can restrain demand. They can't directly solve an inflation shock coming from energy or other supply-side pressures. That makes the policy path more complicated than simply calling this a “hawkish Fed” story.
For Bitcoin and other liquidity-sensitive assets, I think the real variable is therefore financial conditions from here — not the headline 25 bps.
If policymakers signal that another hike is becoming part of the base case, markets may have to reassess how much easing they were expecting. If the message points toward patience, the same hike could be interpreted very differently.
So I'm watching the path, not the headline.
Is the market underestimating how long restrictive policy could remain?
Follow for more macro and infrastructure-layer analysis.
The Fed has now moved the federal funds target range to 3.75%–4.00%. The decision itself isn't the part I find most interesting. Markets had plenty of time to prepare for it.
The bigger question is whether this is an isolated move or the beginning of a more persistent tightening phase.
August inflation gives the Fed a reason to stay cautious. Headline CPI rose 0.4% month over month and 3.4% over the past year, while core CPI increased 0.3% in August and 2.4% year over year.
But there is an important distinction here.
Higher rates can restrain demand. They can't directly solve an inflation shock coming from energy or other supply-side pressures. That makes the policy path more complicated than simply calling this a “hawkish Fed” story.
For Bitcoin and other liquidity-sensitive assets, I think the real variable is therefore financial conditions from here — not the headline 25 bps.
If policymakers signal that another hike is becoming part of the base case, markets may have to reassess how much easing they were expecting. If the message points toward patience, the same hike could be interpreted very differently.
So I'm watching the path, not the headline.
Is the market underestimating how long restrictive policy could remain?
Follow for more macro and infrastructure-layer analysis.
