Will there be no change in Fed interest rates after the September 2026 meeting?

• CME’s FedWatch tool currently puts the probability of a “no change” from the current range of 350-375 basis points at 45.1%. 
• Prediction markets, on the other hand, are pricing a “no change” at 51%, slightly higher but still within a coinflip scenario. 

Overview 

The much-awaited July 29 Fed decision was delivered last week, with the Fed choosing to keep rates unchanged. Notably, the hold was passed in a 9-3 vote, with three officials pushing for a rate hike. A signal that the committee could consider increasing rates in September. 

In addition to the Fed’s hawkish commentary in July’s decision, several factors could tip the scales towards a hike in the next meeting. This includes the re-escalation of Oil prices to above $85, rising bond yields and stubborn inflation reports. 

Fed’s September Decision is a Coin flip

 Both the CME and prediction markets are split at the moment, with the former less convinced that the Fed will hold (45.1%) while prediction markets appear a little bit more optimistic (51%). 

What’s interesting to observe is that the CME had a higher probability of 45.6% at the beginning of August, with prediction markets at 39% at the time. The latter has since climbed, showing more conviction than CME at the moment. 

In July’s decision, prediction markets priced a “no hold” more convincing; the probability only dropped below 70% in a single day (July 14) despite comments from Citadel Securities, which made CME traders less convinced.

What Could Push the Needle

The September decision will likely be dependent on prevailing macro conditions based on inflation, employment and energy prices data. The headline CPI in June hit 3.5% while energy prices rose 15.7% year-over-year, underscoring the risk of inflation. 

Before September’s meeting, Fed officials will receive two additional CPI reports, employment reports for July and August as well as the PCE inflation reading for July. 

A strong wage growth, rising treasury yields and renewed oil pressure could strengthen the case for a hike. On the other hand, weaker hiring and easing energy costs could make the base case for another hold, especially given that private sector employment growth slowed down sharply in July. 

What a No Hike Could Mean for Crypto Prices

Should the Fed hold in September, Bitcoin’s price and other crypto are likely to benefit since the borrowing conditions will continue to be favourable, limiting upward pressure on the dollar and real yields. 

That said, the comments after the decision will be the determinant factor of whether it is a temporary relief for risk-on markets or a boost going into Q4.