Fed Hike 93% Priced In; Market Prices a December Move Too
The Fed's rate decision lands today at 2:00 p.m. ET (9:00 p.m. in Istanbul). Money markets put the odds of a 25-basis-point hike at 93%. The target range would move from 3.50%-3.75% to 3.75%-4.00%, the first increase since July 2023.
The hike itself is priced. What is not priced is the dot plot that arrives with it.
The market is pricing two hikes this year: today and December. The fed funds strip puts 84% odds on two moves or more. The 2026 median dot, by contrast, is expected to hold at 3.875% — a single hike — with a hawkish minority at 4.125%.
The market is not reading today's decision as a destination.
It is reading it as the first step in a series.
Kevin Warsh chairs the committee, and this is his first vote on a hike. In the June dot plot, nine officials projected at least one increase this year and six projected two or more; Warsh submitted no projection.
Forecasters are split. TD Securities expects three hikes in this cycle, with the next two in October and January 2027. Goldman Sachs calls today's move "very unlikely" and looks for a hold through year-end. The press conference begins at 2:30 p.m. ET (9:30 p.m. in Istanbul).
The second story is from Washington, where yesterday's vote has resolved. The Senate fell short on cloture for the CLARITY Act, 49 to 50, against the 60 required. No Democrat voted yes and four Republicans voted no.