Fed sets rate decision today, Bitcoin trades around $80,700

Today at 2 p.m. ET, the Federal Reserve will announce its interest rate decision, though traders view a hold as nearly certain. CME FedWatch places the probability of a hold above 90%.

The current target range for the federal funds rate remains at 3.75%-4.00% following the September hike, which occurred in a unanimous 12-0 vote. This rate dictates the cost consumers pay on loans and credit cards.

Inflation figures show consumer prices increased by 3.7% over the twelve months ending in September. Furthermore, oil prices, driven by the U.S.-Iran war squeezing global supply, are near $100 a barrel, which inflates costs across shipping and groceries.

Investors often move capital out of riskier assets like crypto when Treasury yields rise due to higher inflation, as bonds now offer a nearly risk-free return, with the 10-year yield near 5%.

Focus is shifting toward December; futures and prediction markets assign 75% to 80% odds to another quarter-point increase during the Dec. 8-9 meeting.

Analysts anticipate a "hawkish hold," suggesting rates will stay unchanged while maintaining a tone that leaves room for future increases.

Fed Chair Kevin Warsh previously stated, "I’m not going to prejudge any future decisions we make," while also telling reporters, "This won’t surprise you: I’m not in the forward guidance business."

Why it matters

The Fed's rate decision sets the baseline for consumer borrowing costs, directly influencing market sentiment. Traders are watching for signals that might confirm a hawkish hold, which could affect risk appetite for volatile assets like Bitcoin.