Market expectations for the Federal Reserve’s September policy meeting shifted after Governor Christopher Waller signaled he could support keeping interest rates unchanged if disinflation continues, while leaving the door open for another hike if August inflation surprises higher.
Data from prediction platform Kalshi showed traders assigned a 53% probability that the Federal Open Market Committee will hold its current policy rate at the September 15–16 meeting. A 25-basis-point hike was priced at 44%, while the odds of a larger increase were just 2%, and a 25-basis-point cut stood at 1%. Kalshi trading volume tied to the September decision surpassed $34 million, reflecting elevated investor interest in monetary policy expectations.
Waller, speaking at a Reuters NEXT Newsmaker interview and in official remarks, described recent inflation progress as encouraging. He noted that three-month core inflation cooled to 3.05% through July from 4.76% in February. “If there is continued progress toward our 2 percent goal, then I am willing to support holding the policy rate at its current level,” Waller said.
He added that monetary policy is only slightly restrictive, giving the Fed room to act if inflation accelerates. Energy prices remain an upside risk, Waller said, even though spillover into broader consumer prices has been more limited than initially feared.
Markets reacted quickly: Reuters reported that traders reduced expectations for a September hike, Treasury yields declined and the dollar weakened. That matters for crypto assets such as Bitcoin, which have repeatedly moved with Fed expectations this year, including a July rally after rates were kept at 3.50%–3.75%.
For the rest of 2026, rates markets see limited easing. In Kalshi’s “How many interest rate cuts will there be in 2026?” market, 88% of investors expect no cuts, while one cut is priced at 10% and two cuts at about 2%.
