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Wall Street expects a 75 bps rate hike by the U.S. Federal Reserve in the FOMC meeting today, September 21. Goldman Sachs, Wells Fargo, JPMorgan, Morgan Stanley, and others anticipate a 75 bps rate hike is most likely this month as the Fed pushes to control inflation. Meanwhile, the Bitcoin price continues to struggle under the $20,000 level amid macro fear.
Wall Street Predicts 75 bps Rate Hike by the Federal Reserve
Wall Street believes the Federal Reserve is mostly likely to go with a 75 bps rate hike in September as a 100 bps rate hike may push the economy into recession. The rate hike causes the federal funds rate to reach the highest level since 2008. The Fed benchmark borrowing rate will be between 3.0% to 3.25%, up from the current range of 2.25% to 2.5%.
Goldman Sachs earlier predicted that the Fed could raise interest rates by 75 bps in September. Thereafter, 50 bps rate hikes in November and December. JPMorgan and Morgan Stanley also assert the 100 bps rate hike will be risky for the economy.
Meanwhile, Wells Fargo’s managing director Michael Schumacher says the Fed should go with a straight 150 bps, rather risking panic on Wall Street. Billionaire and Carlyle Group co-founder David Rubenstein says the 100 bps Fed rate hike would depress markets.
However, ex-Treasury Secretary Larry Summers recommends the Federal Reserve to consider a 100 bps rate hike this month to tame inflation. Meanwhile, the U.S. dollar index has hit a 20-year-high of 110.87 today.
The U.S. equity market has opened in the “green” today, with Dow Jones, S&P 500, and Nasdaq Composite rising higher. According to the CME FedWatch Tool, the probability of a 75 bps rate hike is 82%.
Bitcoin (BTC) Price to Rally Amid Dovish Fed
Bitcoin’s (BTC) price fell from $19.7K to $18.4K after the liquidation of long positions worth $63 million. Moreover, the BTC price rebounded to $19.6K again after the liquidation of short positions worth $19.8 million. It indicates that the price trend is maintained in the direction in which a long or short squeeze occurs.
Data indicates traders still hold more short positions than long positions despite the price rise, as long positions have been liquidated about three times more than the short positions.
Moreover, the market volatility is most likely to peak as the Fed announces rate hike. A liquidation of short position will move the Bitcoin (BTC) price upwards.
Meanwhile, Bitcoin evangelist Michael Saylor believes Bitcoin is getting stronger after the Ethereum Merge.
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