Fed officials split on October rate hike as market odds slip below 50%

New York Fed President John Williams, a top official on the Federal Reserve’s rate-setting committee, signaled little urgency for another increase after September’s move, helping pull market-implied odds of an October hike to below 50% from about 70% a week ago. The Fed lifted its benchmark rate by 25 basis points on September 16, raising borrowing costs across the economy. Speaking at the University at Buffalo, Williams, who serves as vice chair of the Federal Open Market Committee (FOMC), said the September decision gives policymakers time to collect additional data. He reiterated that 3.7% inflation is "unquestionably too high" and left the door open to one more increase that "may be appropriate late this year." The Fed’s two remaining meetings in 2026 are scheduled for October 28 and December 9. CME FedWatch, which derives probabilities from futures pricing, now shows the October decision as close to a coin flip after sitting well above 70% weeks earlier. Elsewhere at the Detroit Economic Club, Fed Governor Michael Barr struck a firmer tone. Barr pointed to core PCE inflation— the Fed’s preferred gauge, excluding food and energy—saying that over the past 20 months it matched the 2% target in only two months. "In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," he said. Barr also cited demand tied to artificial intelligence spending as a factor lifting chip prices. For Bitcoin and other risk assets, the path of rates remains critical. Higher yields tend to reward cash and bonds, often drawing capital away from speculative markets. A delay in additional tightening could buy risk assets time, but neither Williams nor Barr ruled out another hike before year-end. Bitcoin has been resilient. BeInCrypto previously reported a 13% rise after the September hike as institutional flows returned. Over the past 24 hours, BTC is up about 0.2%, according to the report. Attention now turns to Wednesday’s release of August PCE inflation, a key catalyst. A stronger-than-expected reading could quickly lift October hike odds back toward the 70% area seen earlier this week.