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BTC Federal Reserve interest rate hike expectations are heating up: Summary of views of major banks and economists
Last week, US consumer price index (CPI) data was released. In August, the U.S. CPI exceeded expectations, especially the persistence of core inflation, which changed the market's expectations for the Federal Reserve's interest rate policy.
August data exceeded expectations, giving more than 85% chance that the Federal Reserve will raise interest rates at the September 15 - 16 Federal Open Market Committee (FOMC) meeting. With inflationary pressures in the United States proving stronger than expected, most experts predict that the Federal Reserve will raise its benchmark interest rate for the first time this week, the first rate hike in more than three years.
Against this backdrop, U.S. banking giant HSBC has revised its previous view that policy rates will remain unchanged and now predicts that the Federal Reserve will raise interest rates 25 basis points each time in September and December 2026. Ryan Wang, US economist at HSBC, said: "With the August employment report and CPI data exceeding HSBC's expectations, we now expect the FOMC to vote in favor of a 25 basis point rate hike at its September 15-16 meeting."
This move will increase interest rates to the 3.75%-4% range. Wang continued: "We believe that the FOMC's new 'dot map' may point to a median forecast of 4.125% for the end of 2026." Based on this, HSBC expects to raise interest rates for a second 25 basis point at meetings on October 27-28 or December 8-9.
Wang added that given the resilience of the U.S. economic momentum, HSBC does not expect to quickly switch to interest rates after it plans to raise interest rates at the end of this year. HSBC predicts that the policy rate will remain at 4%-4.25% throughout 2027.
Goldman Sachs and JPMorgan also said they expected the Federal Reserve to raise interest rates this week amid higher-than-expected inflation data. In addition, analysts at UBS, who had previously predicted that the Fed would keep interest rates stable throughout 2026, announced that they now expect a rate hike of 25 basis points in September and December.
The Federal Reserve's expectation of raising interest rates increases!
Following the release of inflation data on the 11th, Reuters surveyed 101 economists. According to a Reuters survey, 86 economists (about 85%) predicted that the Federal Reserve will raise its benchmark interest rate by 0.25 percentage points at its meetings on the 15th and 16th.
If the forecast is correct, the benchmark interest rate will rise from the current 3.50%-3.75% to 3.75%-4.00%. This will be the first time the Fed has raised interest rates since July 2023.
These results indicate a shift in market expectations. Last week, more than two-thirds of economists expected interest rates to remain unchanged, but those expectations reversed after strong inflation data. CME's FedWatch tool currently prices the probability of the Fed raising interest rates at 88.5%.
In addition, more than half of the economists surveyed said they expected to raise interest rates at least once before March 2027. Concerns about rising inflation in core personal consumption expenditure (PCE), the Fed's preferred inflation indicator, and high energy prices have increased the possibility that monetary policy may tighten further.
What impact does this have on Bitcoin?
The increased expectation of the Federal Reserve to raise interest rates can be regarded as bad news for Bitcoin in the short term. Higher interest rates support U.S. dollar and U.S. bond yields and could reduce investor appetite for risky assets. This could put selling pressure on Bitcoin.
In particular, strengthened expectations that the Federal Reserve may raise interest rates multiple times before the end of 2026 could lead to increased volatility and short-term corrections in Bitcoin.
This article does not constitute investment advice.
