According to CME Group, there is a 98% chance that the interest rate will remain in the current range.
The price of bitcoin (BTC) usually benefits from low interest rates.
The financial market predicts that the United States Federal Reserve (FED) will keep interest rates intact at its next meeting on June 17, 2026.
This expectation is consolidated even after the arrival of Kevin Warsh to the presidency of the organization, a leadership change promoted by President Donald Trump who, however, has not altered the projections of a conservative monetary policy in the short term.
There is a 98% chance, according to CME Group’s FedWatch tool, that the rate remains the same in the current range.
The remaining percentage represents a residual and extremely low option that the FED decides to cut the interest rate by 25 basis points, which is equivalent to a quarter of a percentage point, a minimum variation that the market considers extremely unlikely in the current context.
The implicit market probabilities regarding changes in the reference interest rate for the coming days almost unanimously project a scenario of continuity. The vast majority of market participants bets that the FED will not change interest rates at next week’s meetingleaving them at the current level of 3.5% to 3.75%.
Inflation in the US soars
The projected stability responds directly to the severity of the main problem for which the FED will maintain the cost of money and that is, the rise in inflation. As expected, the U.S. Bureau of Labor Statistics reported today June 10 that the Consumer Price Index (CPI) increased by 4.2% year-on-year in Mayits highest level since April 2023, compared to 3.8% in April.
These numbers confirm the increase as the cost of living continues to rise for American consumers. Much of the increase in the headline figure is due to rising energy costs as a result of the war with Iran and the closure of the Strait of Hormuz.
As a result of the conflict in the Middle East, the price of Brent crude oil reached $114 per barrel on May 4, an escalation that fueled global inflation expectations. Although oil is currently stands at 92 dollarsthe macroeconomic risk persists and is totally palpable in inflation.
This pressure on prices is supported and aggravated by the internal strength of the economy. Although from a social point of view a robust labor market is good news, for monetary policy it represents a challenge, since the labor market continues to show extreme rigidity.
The May records revealed the creation of 172,000 new non-agricultural jobs. This labor solidity generates greater salary growth and sustains high consumption, what fuels inflationary pressures and reduces the incentives for the FED to cut interest rates in the short term.
For his part, Trump has publicly pushed for immediate monetary easing. Regarding the new manager, Trump stated in an interview: «Kevin is fantastic, and I want him to do whatever he wants. I don’t want to influence him too much. But we had an excellent report. “We are doing wonderfully, and it is unfair that every time we do well, they want to raise interest rates.”
The president argued that The strength of the economy should not be punished by the increase in credit prices. “Today, when there are good reports, the market falls because they think they are going to raise interest rates,” Trump said during an interview on June 7, adding that “there is no reason to raise interest rates.”
Trump defends that prosperity is sustained by cheap financing. “The country is getting great. We built the country by doing great things and with low rates. What they do when interest rates go up is try to kill success. I don’t want to kill success. In fact, we should lower interest rates.”
This aggressive stance is not new in the Trump administration. The president repeatedly pressured the previous chairman of the Federal Reserve, Jerome Powell, to lower interest rates.
Why does the interest rate impact bitcoin?
The FED’s decisions are closely watched by the bitcoin (BTC) market because they determine much of global liquidity and the cost of money. The interest rate is the price you pay for borrowing; When it is high, credit becomes more expensive and consumption slows down to contain inflation.
When interest rates fall, borrowing is cheaper for companies and investors. Additionally, conservative instruments (such as treasury bonds) offer lower yields, which often pushes some capital into riskier assets in search of higher returns. These contexts tend to favor to assets considered “risky”, such as stocks, BTC and cryptocurrencies. The price of bitcoin usually benefits from low interest rates.
On the contrary, when rates rise or the FED withdraws liquidity from the financial system, money becomes more expensive and many investors reduce exposure to assets considered risky.
Warsh took office as the 17th chairman of the Federal Reserve on May 22. In the past he has declared that bitcoin is an “important asset” and has become recognized among businessmen in the industry as “the first pro-bitcoin president of the FED,” as reported by CriptoNoticias.
The decision to keep rates stable next week means that the BTC market will continue to operate under the same current liquidity conditions. Although Warsh’s arrival opens positive long-term expectations for bitcoin and cryptocurrencies due to his favorable philosophy towards BTC, investors will have to assimilate that the cost of money will not fall immediately.