September Fed rate hike fears look overblown as the probability stands at just 58%, not 90%
Market analysts suggest that fears of a September Federal Reserve rate hike are currently overstated, as current pricing indicates only a 58% probability. Despite recent hawkish rhetoric from officials, experts argue that the market is not yet treating a hike as a certainty.
Why it matters
Accurate assessment of Fed policy is critical for investors in volatile assets like Bitcoin and gold, which are sensitive to interest rate fluctuations.
But those fears, at least as reflected on social media, appear overblown looking at how the CME's Fed funds futures are actually pricing the possibility. For bitcoin and gold, this means scope for continued ascent following August’s 23% and 10% gains.
As of this writing, the probability of a rate hike stood at 58%, a long way from the 90%-or-higher reading that typically qualifies as a done deal, according to the CME’s FedWatch tool. The threshold above which the Fed tends to validate market expectations rather than surprise them, besides, sits somewhere between 60% and 70%.
"The next Fed meeting is a lean hike not a done deal," Jim Bianco, founder of Bianco Research, said on X.
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