Federal Reserve officials are likely to raise the central bank’s benchmark rate by 75 basis points at their November meeting, according to recent figures. CME’s FedWatch Tool.
Federal Open Market Committee officials have taken an aggressive approach to containing inflation, target range hike for the federal funds rate by 300 basis points thanks to a series of hikes that began in March.
When these government officials strengthen the benchmark rate, it puts upward pressure on broader interest rates, a development that makes yield securities offer bigger payouts to investors.
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This development could potentially create headwinds for risky assets such as cryptocurrencies and stocks that do not offer regular interest payments.
Currently, the aforementioned range is between 300-325bp, and earlier today the FedWatch tool showed a 99.8% chance of it reaching 375-400bp at the November policy meeting.
The screenshot below, which was taken around 2 p.m. EST, shows these predicted odds, which harness 30-day Fed Funds futures price data to quantify market participants’ expectations.
The chart above shows a 0.2% chance that the aforementioned central bank officials will hike rates by 100 basis points and zero odds that they will go for a 50 basis point rate hike.
In the hour since the aforementioned screenshot was taken, the odds have gone down, but the FedWatch CME tool was still showing about 95% chance up 75 basis points in November at the time of this writing.
The high ratings provided by the FedWatch tool match a prediction made in a recent Barclays report, in which the authors said the central bank would opt for a 75 basis point rate hike at the November and December meetings. , according MarketWatch.
Moreover, the analysts who wrote this report intended that FOMC officials will opt for another 50 basis point rate gain in February, which will bring the federal funds rate to a target of 500 to 525 basis points early next year.
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