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ZEC $1,404 Fed's Michael Barr says more hikes likely needed as October rate hike odds fall
Fed Governor Michael Barr says more rate hikes may be needed, while traders cut October hike odds to 50% and John Williams says there is no urgency.
Key takeaways
- Odds are split. Polymarket shows a 50% chance of an October hike, while Kalshi traders put 55.2% odds on no change.
- Williams sees no rush. New York Fed President John Williams said there is no urgency after rates rose to 3.75%, 4%.
- Bitcoin holds below $83,213. Bitcoin traded below $83,213 as 13,800 BTC left Binance, the largest single-day net outflow since 2023.
What happened
Federal Reserve Board Governor Michael Barr said the Fed may need to raise rates further to bring inflation down to its 2% target. In a speech in Detroit, Barr said that in his base case they may need to raise rates further to ensure inflation comes down to their target in a timely fashion. He also noted that inflation risks had increased while downside risks to the labor market had cooled.
The comments came weeks after the Fed raised rates for the first time since 2023 at the September FOMC meeting. Barr is among a host of Fed officials who continue to raise concerns about rising inflation.
Traders, however, reduced bets on an October hike. Data from Polymarket showed a 50% chance that the Fed will raise rates, down from a high of 70%. CME FedWatch put the odds at around 44.8% after New York Fed President John Williams said there is no urgency for another immediate increase. Kalshi traders turned toward no rate change in October, with those odds rising to 55.2%.
Why it matters
Lower odds of a rate hike could give Bitcoin and the wider crypto market some relief. Bitcoin traded below $83,213, and around 13,800 BTC left Binance, marking its largest single-day net outflow since 2023. The global crypto market cap stood at $2.95 trillion, almost unchanged over the past 24 hours. Bitcoin accounted for $1.67 trillion, with a market dominance of 56.62%.
Altcoin activity also picked up. Altcoin spot trading volume reached nearly four times Bitcoin's volume, while Glassnode's Altcoin Cycle Signal climbed above 81.
What the data shows
Polymarket showed a 50% chance of an October hike, down from 70%. CME FedWatch put the odds near 44.8%. Kalshi traders put 55.2% odds on no change. The market expected PCE inflation to remain unchanged at 3.3%. Williams expects inflation to reach 3.5% by the end of 2026. The Fed raised rates to 3.75%, 4% last month.
What is still unclear
- Fed officials are split. Barr said the Fed may need to raise rates further, while Williams said there is no urgency for another immediate increase. Barr also said the central bank has been "knocked off course" by strong AI demand and higher oil prices.
- The Fed has never raised rates in October ahead of a U.S. election, according to the report.
- A lower inflation print could further crash the odds of an October hike, while an in-line or higher reading would support the case for another hike.
Questions readers ask
What are the October Fed rate hike odds?
Polymarket showed a 50% chance, down from a high of 70%. CME FedWatch put odds near 44.8%, and Kalshi traders put 55.2% odds on no change.
Why did October rate hike odds fall?
New York Fed President John Williams said there is no urgency for another immediate increase after the Fed raised rates to 3.75%, 4%.
What did Michael Barr say about rate hikes?
Barr said the Fed may need to raise rates further to bring inflation down to its 2% target. He also noted that inflation risks had increased.
How is Bitcoin reacting to the Fed comments?
Bitcoin traded below $83,213. Around 13,800 BTC left Binance, the largest single-day net outflow since 2023.
