Fed Set to Raise Rates Amid Inflation Concerns

The Federal Reserve is set to raise interest rates for the first time in three years on Wednesday, with a 92.3% probability of a 25-basis-point hike according to CME FedWatch. This decision marks a critical test of independence for Fed Chair Kevin Warsh, who has faced pressure from President Donald Trump to lower rates.

The inflation data released last month showed core CPI rose 0.3% month over month and headline inflation held at 3.4%, leaving policymakers with little room to delay the hike. The decision represents a signal that the Fed is willing to defy the White House and prioritize its inflation mandate over political considerations.

Bitcoin has already fallen below $76,000 amid liquidations exceeding $545 million, while the failure of the CLARITY Act in the Senate removed a key crypto catalyst. Traders are focused on the dot plot, dissent count, and whether Warsh signals a December hike during his press conference at 2:30 p.m.

Global equity markets rallied into the announcement, with Asian benchmarks posting gains on Wednesday. The stakes extend beyond rates, as hyperscalers' massive spending plans to expand AI infrastructure could be weighed down by higher borrowing costs.