Huo Xing Finance reports: On September 16, the Federal Reserve will announce its interest rate decision and summary of economic projections at 2:00 AM Beijing Time on Thursday, followed by a press conference from Fed Chair Kevin Warsh half an hour later. Federal funds futures indicate a 92.5% probability of a 25-basis-point rate hike, with the target rate range expected to rise from 3.50%–3.75% to 3.75%–4.00%. If implemented, this would be Warsh’s first rate hike since assuming office in May this year. U.S. core CPI rose 0.3% month-over-month in August, while geopolitical tensions in the Middle East have pushed oil prices back above $100 per barrel. Markets will closely monitor the voting breakdown and the updated dot plot to determine whether the minority stance of only three officials supporting a hike in July has evolved into broader policy consensus, and whether another rate increase is likely before year-end. Compared to this 25-basis-point adjustment, Warsh’s commentary on the future path of rates may be more critical. Wall Street institutions are primarily modeling three scenarios: If the Fed hikes by 25 basis points and signals that only one or two more hikes remain before pausing, equities may absorb the outcome, and the 10-year Treasury yield could decline slightly; if the Fed holds rates steady but hints at a potential hike this year, initial stock market rebounds may prove unsustainable, long-term Treasury yields could rise, the dollar may weaken, and gold and tangible assets could perform better; if the dot plot or post-meeting remarks suggest three or more consecutive hikes ahead, the 10-year Treasury yield could clearly break above 5%, U.S. equities may drop more than 1%, and the dollar could strengthen. Warsh also faces dual pressure from the White House urging lower borrowing costs and rising yields in the bond market. Markets are watching whether he can convey the Fed’s commitment to fighting inflation without leading investors to interpret this move as the start of a new prolonged tightening cycle.
Fed raises rates by 25 bps with 92.5% probability; Wall Street models three market scenarios
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Summary
The Fed is expected to raise rates by 25 bps with a 92.5% probability, pushing the target range to 3.75%-4.00%. This would be the first hike since Kevin Warsh took office. Rising oil prices and core CPI data have kept interest rates in focus. Wall Street models three scenarios: a 25-basis-point hike could cause 10-year yields to dip slightly; a pause may weaken the dollar; and further hikes could push yields above 5%. Altcoins to watch may react sharply to any hawkish signals.
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