Fed Rate Decision Pits 104 Economists Against a 36% Hike Bet
The Federal Reserve (Fed) decides on interest rates this Wednesday. Almost every economist expects no change. Traders are far less sure.
That gap matters. If the Fed surprises, stocks, bonds, oil and Bitcoin (BTC) all move fast. Bitcoin traded near $64,915 on Monday, up 0.7%.
Economists Say Hold, Traders Say Maybe Not
The Fed’s main interest rate has sat between 3.50% and 3.75% for four meetings. The FactSet consensus says it stays there.
Reuters asked 104 economists in mid-July. All 104 said hold. Fully 78 expected no change through December.
Traders tell a different story. Fed funds futures put the chance of a rate rise at 13% a week ago. By Friday it had jumped to 38%. It now sits near 36%.
“We are currently seeing the biggest indecision by the markets regarding the expected outcome for some time,” analyst The Martini Guy noted.
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The two camps are not really arguing. Economists name the single likeliest outcome. Futures price every outcome, including the unlikely ones.
The panel is also shifting. Most of those same economists now rate the chance of a hike later in 2026 as high. A month ago, most said low.
Why the doubt? Chair Kevin Warsh has stopped hinting at what comes next. The Fed will not publish new forecasts either. That leaves traders guessing ahead of this week’s central bank decisions.
“Absent, also, is so-called forward guidance, which we agreed was not well suited to the current policy conjuncture,” said Warsh.
Gregory Daco of EY-Parthenon calls a July hike unlikely. Even so, he puts the rest of the year at 60-40. Larry Meyer, a former Fed governor, expects a hold but sees Lorie Logan and Beth Hammack voting against it.
Oil and Tariffs Brought Inflation Back
Oil is the trigger. Brent crude closed at $100.69 on July 23, its first close above $100 since May 26. Prices are up over 30% this month.
Costlier oil means costlier fuel, and that lifts inflation. A weekend pause in Iran strikes has calmed things a little.
Tariffs came next. On Friday, the US added new import taxes of 10% and 12.5% on goods from 60 trading partners.
These replace tariffs the Supreme Court threw out in February, using a law that is harder to challenge.
Bond markets reacted. The 10-year Treasury yield closed Friday at 4.69%, its highest since January 2025. That is the rate the US government pays to borrow for a decade.
The two-year yield is the real tell. It ended the week at 4.33%, above the Fed’s own 3.75% ceiling. Bond traders are already braced for higher rates.
What It Means for Bitcoin
Bitcoin trades near $64,915. That is roughly 49% below its record of $126,080, set in October 2025.
When safe bonds pay 4.69%, risky bets look less appealing. That has capped Bitcoin all month.
A rate rise would be the Fed’s first since July 2023, ending three years of pauses and cuts.
A calm hold could do the opposite. Bitcoin stalled near $66,000 earlier this month, when AI-driven inflation worries capped the rally.
Warsh speaks 30 minutes after the decision. With forecasters and traders this far apart, his tone will matter more than the vote. Priced-in outcomes rarely move markets. Surprises do.
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