Trader Crypto Rover reported on X that the chances of a Federal Reserve rate hike in 2026 have risen to 46.9%. At the same time, expectations for a rate cut have dropped to zero. Traders now expect the Fed to take a “wait-and-see” approach before making any major policy moves.

The CME FedWatch Tool shows that interest rates are likely to stay between 3.50% and 3.75% through mid-2026. For April, markets give a 96% chance that rates will remain steady. That confidence drops slightly by June and July, but traders still see very little chance of cuts.

“The Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” the FOMC recently noted.

Gradual Shift in Rate Expectations

As 2026 moves forward, the chances of slightly higher rates start to rise. By September and October, markets see a modest risk of rates reaching 3.75%–4.00%. Still, the most likely scenario keeps rates around the mid-3% range. Experts say that the Fed will probably keep policy tight but steady, given ongoing inflation and a resilient economy.

Polymarket data supports this view. The “0 cuts” outcome dominates, while a single cut has only a 25% chance. Two cuts fall to 18%, three cuts to 10%, and four cuts barely reach 4%. As a result, investors expect a slow, gradual approach rather than aggressive easing.

Chloe, a researcher at HTX Research, said, “The market environment has moved from ‘FX- and expectations-driven risk appetite’ to ‘the burden stemming from higher-for-longer rates, energy shocks and shrinking liquidity.’

Market Ripples and Global Factors

U.S. Treasury yields climbed, with the 30-year at 4.972% and the 10-year at 4.458%. Rising yields show bond sell-offs as traders weigh cautious Fed signals. Oil prices also jumped after President Trump extended a pause on energy facility attacks. Brent crude rose 2.56% to $110.65, while WTI gained 2.8% to $100.20 per barrel.

Financial conditions are now pressuring risk assets. Chloe noted, “High-risk assets and projects lacking meaningful cash flow may face relatively greater pressure.” Bitcoin remains steady, but Ethereum struggles to attract capital, and most altcoins continue to fall.

Markets are closely watching U.S. economic data and Bank of Japan signals to gauge the next moves.

Related: Fed Confirms CBDC Pause While Expanding Digital Asset Oversight

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