TL;DR
Trump-nominated Fed Chair Walsh will preside over the FOMC meeting for the first time; market pricing indicates an approximately 87% probability of a 25-basis-point rate hike in September.
· Core CPI rose 0.3% month-over-month in August, Brent crude oil approached $107, and Goldman Sachs, JPMorgan, and Reuters surveys shifted in unison to anticipate rate hikes, testing Walsh's independence.
· Underlying Assets: Bitcoin, Ethereum, S&P 500, 10-Year U.S. Treasury Bonds, U.S. Dollar Index.

Trump’s nominated Fed Chair Walsh will preside over his first FOMC meeting on September 15–16; the market overwhelmingly expects a 25-basis-point rate hike, pushing the federal funds rate to a range of 3.75% to 4.00%.

Wash was sworn in this May and has long been known as a hawk. At the Jackson Hole global central bank symposium in August, he shifted responsibility for persistently high inflation back onto the Federal Reserve, emphasizing that it would not ease policy until there is clear and substantial evidence of inflation declining.

This directly contradicts the nominee’s public statements. Trump has repeatedly claimed that the U.S. should have the lowest interest rates in the world and that the Federal Reserve should serve economic growth rather than focus solely on inflation. White House economic advisor Hassett relayed that the president is “unhappy” with rate hikes but respects the Fed’s independence.

The market's quantitative tool for measuring this conflict is the CME FedWatch Tool. Traders bet real money on whether the next meeting will result in a rate hike, cut, or hold, with these bets instantly converted into probabilities—like a poll voted on with cash. The current figure stands at approximately 87%.

The market prices an 87% probability of a 25-basis-point rate hike in September.

Inflation and oil prices have pushed the probability of an interest rate hike to nearly 90%.

Inflation has been above the 2% target for approximately 65 months. This round of rate hike expectations is not the result of White House pressure; inflation data and oil prices first pushed the market to that point.

In August, core CPI (inflation excluding the two most volatile components, food and energy) rose 0.3% month-over-month, exceeding expectations, while the energy component increased 16.3% year-over-year. Amid escalating conflicts in the Middle East and disruptions to the Strait of Hormuz shipping lanes, Brent crude approached $107, directly pushing up overall prices. The similarly strong core reading indicates that inflationary pressures are spreading from gas stations to a broader range of goods and services.

Core CPI rose 0.3% month-over-month in August; energy increased 16.3% year-over-year.

The bond market reacted first. The 10-year U.S. Treasury yield rose above 5%, and futures markets priced in a 9% chance of a September rate hike, up from around 70% before the CPI release.

The interest rate hike probability increased from 70% to 87% prior to the CPI release.

In a Reuters survey of 101 economists, 86 predicted a 25-basis-point rate hike, with some respondents expecting at least one more hike before the first quarter of next year. Goldman Sachs and JPMorgan also revised their forecasts from no change to a hike following the data release. A simultaneous shift by the market, investment banks, and surveys is uncommon over the past two years.

Reuters survey of 86 economists predicts an interest rate hike

Hawkish data meets the White House's lowest interest rates

The key takeaway from this meeting isn’t just whether rates will be raised, but how Walsh answers a more pointed question: whether his rate decisions are guided by data or by the White House.

Wash served as a Federal Reserve governor from 2006 to 2011, was nominated by Trump in January 2026, and was confirmed by the Senate in May with a 54-45 vote. Upon taking office, Trump’s instruction to him was, “Do your own thing”—now the market is testing the validity of that statement.

The conflict lies here: Trump needs low interest rates to support growth and the midterm elections, while Powell needs evidence of declining inflation to back up his statements about taking responsibility for high inflation. If he follows the market’s 87% pricing of a rate hike at his first meeting, it would signal through action that his nomination carries no policy commitments. If he holds steady, the market will immediately question the credibility of his hawkish statements.

The Federal Reserve’s interest rate decisions are not legally under the direct control of the president; the president can only make public statements and nominate personnel. Some Democratic senators previously questioned whether Walsh might become a puppet of the White House, a label that adds extra credibility to his statements at his first meeting.

After an interest rate hike, the most overvalued assets come under pressure first.

The interest rate hike has been implemented, but that doesn't mean risk assets will immediately decline; however, higher discount rates will first compress the valuations of the most expensive assets.

For the crypto market, higher real interest rates simultaneously squeeze liquidity and risk appetite; Bitcoin and Ethereum have shown heightened sensitivity to interest rate expectations in this cycle.

The situation in U.S. equities is more complex. Strategists at Goldman Sachs, Morgan Stanley, and others believe corporate earnings can still support the indices, but yields above 5% themselves create valuation pressure, causing institutions to diverge on whether earnings can withstand such high rates. These remain assumptions, not established facts.

Dot plot and White House口径 determine terminal rate pricing

The first verifiable reading after the meeting is the dot plot, which shows each committee member’s anonymous expectations for the future path of interest rates. If it suggests further rate hikes beyond 2027, market pricing for the terminal rate will be revised upward. If it points only to this one hike, it indicates the committee remains on hold. Discussions before the meeting about the depth of internal divisions remain speculative.

The White House’s stance is another variable. If the phrasing “unhappy but respectful of independence” continues, it indicates that pressure remains limited to public statements, which the market can treat as noise.

The immediate price response of assets determines whether this 87% has been fully absorbed. If, after the rate hike is implemented, Bitcoin and the S&P 500 experience only limited declines, it indicates that expectations have already been priced in. If there is significant volatility, it suggests that some positions have yet to be adjusted, leaving room for price retracement.