Fed "Will raise interest rates further"...Polymarket, rate hike betting 70%→50%

▲ Federal Reserve (Fed), interest rates, economic indicators/AI generated image

A senior official of the U.S. Federal Reserve (Fed) has repeatedly hinted at the possibility of further interest rate hikes, but the betting fervor in the virtual asset prediction market is rapidly cooling down. This situation shows a direct clash between the monetary authority's hawkish remarks and market participants' expectations for an interest rate freeze.

CoinGape reported on September 30 (local time) that Federal Reserve Board Governor Michael Barr reaffirmed that further interest rate hikes might be necessary to bring inflation back to the 2% target. Governor Barr pointed out that the risks to achieving the price target have increased significantly and emphasized the need for policy readjustment to balance inflationary pressures and labor market risks. He explained that uncertainties in the Middle East and rising energy prices due to the U.S.-Iran conflict are strongly stimulating price instability among Fed officials.

However, despite the monetary authority's strong tightening warnings, virtual asset traders' reactions are mixed. According to data from the decentralized prediction market platform Polymarket, the probability of the Fed raising the benchmark interest rate in October has sharply dropped from its previous high of 70% to 50%. Although hawkish remarks from Fed officials, including Governor Barr, continue daily, market participants have significantly reduced their betting proportion, casting doubt on the realization of further interest rate hikes.

The overall virtual asset market is in a wait-and-see mode ahead of key macroeconomic indicators scheduled for this week. As the September non-farm payroll report, which will critically influence the Fed's October monetary policy decision, approaches on Friday, prices of major virtual assets, including Bitcoin (BTC), are maintaining defensive strength within a short-term consolidation range.

The Fed's hawkish stance on achieving a 2% inflation target and the market's reduced betting on rate hikes, anticipating an economic slowdown, are in a tight standoff. The results of the employment indicator, which will confirm whether the labor market is actually cooling down, are expected to be the final watershed determining the Fed's October interest rate decision and the direction of the virtual asset market.

[Article Key Summary]

-Fed Governor Michael Barr repeatedly emphasized the need for further interest rate hikes to return inflation to 2%.

-Polymarket's probability of an October rate hike plunged from 70% to 50% despite the Fed's hawkish warnings.

-Ahead of Friday's September employment report release, the virtual asset market, including Bitcoin (BTC), has entered a consolidation phase.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*