Cryptocurrency bettors have sharply lowered the odds of a quarter-point interest rate in October, following pushback from key Federal Reserve officials against rushing the next policy move.
Rate Hike Bets Cool Across Prediction Markets
The odds of a 0.25% rate cut by the Kevin Warsh-led Fed stood at 25% on Polygon (CRYPTO: POL)-based Polymarket, down from 67% a week ago. In the same period, the probability of rates remaining unchanged soared from 33% to 75%.
Over $22 million has been wagered on the outcome. The market’s resolution will depend on the Federal Open Market Committee’s statement following the Oct. 28 meeting.
Kalshi punters moved in unison, lowering the rate hike probability from 64% to 27% in a week. Odds have also tumbled on the CME FedWatch tracker, from 64% to 28%.
Fed Officials Say There’s No Need for Urgency
The significant drop comes as New York Fed President John Williams signaled a cautious approach to future monetary policy.
Williams said earlier this week that policymakers "have time to gather more information" and "there is no need for urgency." He noted, though, that one further upward rate adjustment might be appropriate "late this year."
Fed Vice Chair Philip Jefferson echoed a similar view on Thursday, stating that he and his colleagues "will need to come to our own judgment, which may take more time" before shifting monetary policy.
Oliver Rust, Head of Data at blockchain-based data tracing platform Truflation, said another rate hike is hard to justify, arguing that underlying inflation is cooling.
August’s personal consumption expenditures price index rose 0.3% month-over-month, below economists’ expectation of 0.4%. Headline PCE inflation held at 3.4%, matching July’s revised reading and below the 3.7% consensus.
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