Today’s decision may be less important than the message that comes with it.
I don’t expect the Fed to change rates today. What matters more is whether policymakers leave the door open for another hike before the end of the year.
There’s a good reason to expect that.
Inflation is still proving stubborn. Demand remains fairly strong, while supply-side pressures are adding to the problem. At the same time, the labor market is starting to weaken, even if that isn’t fully showing up in the headline data yet.
That puts the Fed in a difficult position. Cutting too soon could reignite inflation, but keeping rates high for too long could put more pressure on the labor market.
For now, I think the Fed will prioritize inflation.
So while today may be a pause, I don’t think the tightening story is necessarily over. I’d expect the Fed to keep a December hike firmly on the table.
FOMC interest rate decision will happen today at 2PM ET.
91% odds of a rate pause, so it has pretty much priced in.
At 2:30PM ET, Kevin Warsh's press conference will start, which is the most important one.
Since the last FOMC meeting, both CPI and PPI have spiked higher, which means the inflation problem is getting worse.
If Warsh hints at more future rate hikes, markets could selloff hard.
And if he hints at a rate pause, BTC could tap the $82K-$82.5K zone.