A clear split has emerged in market expectations for the U.S. Federal Reserve’s next policy move, as the CME FedWatch Tool shows an overwhelming consensus to hold rates steady in June, while a key Fed governor has publicly endorsed the idea that markets should also price in possible rate hikes.
According to data released on May 19, the CME’s probability gauge, which tracks federal funds futures, indicates a 99% chance that the central bank will maintain its benchmark rate at 5.25%–5.50% at the June 2026 meeting, with only a 1% probability assigned to a 25-basis-point cut. The outlook for July is less uniform: an 84.4% likelihood of a hold, a 14.8% chance of a quarter-point hike, and a 0.8% chance of a cut.
However, just hours after that data was published, Federal Reserve Governor Christopher Waller stated at a monetary policy conference in New York that it is “healthy” for financial markets to price in both steady rates and increases, rather than only anticipating cuts. Waller warned that market participants had grown too complacent in the belief that the next move would be an easing, and argued that a broader range of expectations reduces the risk of premature loosening in financial conditions that could undermine inflation progress.
Waller’s remarks immediately shifted sentiment: stock markets trimmed gains, the U.S. dollar strengthened, and traders’ expectations for a June rate hike jumped to roughly 40%, up from 25% a month earlier. The Fed has held rates at restrictive levels since mid-2025, and officials continue to emphasize a data-dependent approach given persistent inflation and a resilient labor market.
For the crypto sector, the implications are significant. Elevated interest rates tend to suppress appetite for risk assets, and a potential tightening bias could prolong downward pressure on Bitcoin and altcoins. Investors are already recalibrating portfolios, as higher-for-longer rates raise the opportunity cost of holding non-yielding digital assets. As the Fed’s message shifts from a pause to a possible resumption of hikes, volatility in crypto markets may intensify in the weeks ahead.
