Fed "No reason to raise interest rates again in October"...Bitcoin (BTC) breathes a sigh of relief

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The virtual asset market, including Bitcoin (BTC), breathed a sigh of relief as a senior official of the Federal Reserve (Fed) put the brakes on the possibility of an additional benchmark interest rate hike in October.

According to cryptocurrency media outlet BeInCrypto on September 29 (local time), John Williams, president of the Federal Reserve Bank of New York and second-in-command of the Federal Open Market Committee (FOMC), expressed caution regarding an October rate hike. President Williams flatly stated, “There is no urgent need to raise interest rates right now.” He assessed that inflation, currently at 3.7%, is still excessively high, but added that an additional rate hike once at the end of the year might be appropriate. The Fed's remaining monetary policy meetings for 2026 are scheduled for October 28 and December 9.

Immediately after President Williams' remarks, the sentiment in the derivatives market changed rapidly. According to Chicago Mercantile Exchange (CME) FedWatch data, the probability of a benchmark interest rate hike in October, which exceeded 70% last week, plummeted to 47% in just one day. The expectation of a hike, which was as high as 70.9% just a few days ago, shifted to a tight tug-of-war between a freeze and a hike, increasing expectations for easing monetary policy.

On the other hand, Michael Barr, Vice Chair for Supervision of the Federal Reserve (Fed), maintained a hawkish stance and did not let his guard down. Vice Chair Barr warned, “While labor market risks have decreased, inflation risks have still increased,” adding, “Further monetary policy adjustments may be necessary.” If benchmark interest rates rise, yields on safe assets such as government bonds and deposits increase, which can lead to capital outflow from risk assets like Bitcoin (BTC). However, if the timing of a short-term hike is pushed to December, the market gains valuable buffer time.

Bitcoin has demonstrated strong downside resilience, bouncing 13% immediately after the surprise rate hike on September 16, thanks to institutional capital inflows. Currently, Bitcoin is undergoing a selling pressure digestion process around the $83,540 mark. Market experts diagnose that if the upcoming August Personal Consumption Expenditures (PCE) price index comes out higher than expected, the probability of an October rate hike could surge again, stimulating short-term volatility, thus requiring close monitoring of price index trends.

[Key Article Summary]

-New York Fed President John Williams stated there was no urgency for an October rate hike, alleviating market fears of early tightening.

-On CME FedWatch, the likelihood of an October rate hike plunged from 70.9% to 47% in a single day, falling below 50%.

-With Bitcoin holding the $83,500 level, the upcoming PCE price index is expected to be the final watershed for October's monetary policy.

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