Fed likely to hold rates steady despite leadership change, oil prices rise

The Federal Reserve is expected to keep interest rates unchanged, even amid leadership transitions, with the likelihood of rate cuts remaining low. In the market tracking whether there will be no rate cuts in 2026, the “yes” position has risen to 43.1%, up from 33% the previous week.

Ongoing tensions between Iran and the United States are driving oil prices higher, adding inflationary pressure. This situation makes it harder for the Fed to lower rates, even as the labor market shows signs of weakening. As a result, expectations that rates will remain unchanged through 2026 have strengthened, now standing at 43.1%.

Market activity reinforces this outlook. The most notable move occurred at 12:39 PM, when the probability jumped 12 percentage points, from 36% to 48% in favor of “yes.” Over the past 24 hours, trading volume reached $130,975 in notional value, with $52,199 actually traded in USDC. It takes about $13,903 to shift the price by 5 points, suggesting moderate liquidity.

At a price of 43 cents, a “yes” position would pay $1 if no rate cuts occur by 2026, implying a 2.32x return. For this scenario to materialize, inflationary pressures—particularly from energy—would need to remain elevated long enough to prevent monetary easing.

Investors should watch upcoming statements from Fed Chair Jerome Powell, along with any changes in the FOMC’s projections. Inflation data (CPI) and geopolitical developments affecting energy prices are likely to remain the key drivers.