October Fed Rate Hike Odds Drop After Williams Downplays Urgency

New York Fed President John Williams, the second most senior official on the Federal Reserve's rate-setting panel, dismissed the idea of an October rate increase. According to Williams, the Fed sees "no need for urgency."

A week ago, markets assigned a 70% probability to an October rate increase. That figure has now slipped below 50%. The question is what this shift means for Bitcoin and the broader cryptocurrency space.

September Rate Hike Allows Fed to Wait

The Fed raised its benchmark borrowing cost by a quarter point on September 16. That move pushed up rates on mortgages, business loans and other credit.

Williams serves as vice chair of the Federal Open Market Committee (FOMC), the body that decides on rate changes. He made his remarks during an appearance at the University at Buffalo.

"With the policy action we took at our September meeting, there is no need for urgency, and we have time to gather more information," said Williams.

Despite that, he described 3.7% inflation as "unquestionably too high." He added that an additional rate move "may be appropriate late this year." The Fed's two remaining meetings in 2026 are scheduled for October 28 and December 9.

Market participants responded accordingly. Based on CME FedWatch data, which converts futures prices into probability estimates, the likelihood of an October hike now stands near 50%. Just weeks earlier, that probability was well above 70%.

Fed Governor Warns More Rate Increases Likely

Fed Governor Michael Barr addressed the Detroit Economic Club and struck a less patient tone. He focuses on core PCE, the Fed's preferred inflation measure, which excludes volatile food and energy prices.

Over the past 20 months, Barr noted only two months where that gauge aligned with the 2% target.

"In my base case, further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion," Barr said.

He attributed some of the upward pressure to spending on artificial intelligence (AI), which is driving up chip prices.

Why Bitcoin Is Still at Risk

Higher interest rates reward savers holding cash and bonds. That dynamic can draw funds away from riskier assets such as Bitcoin.

A delay in rate action would give risk assets more breathing room. Yet neither Williams nor Barr ruled out another increase before year-end. Williams pointed to "late this year," while Barr indicated further moves are probable.

FED’S BARR SEES MORE RATE HIKES AHEAD

Fed Governor Michael Barr says further policy adjustments are likely needed, warning that inflation risks have increased while labor-market risks have receded.

Barr expects U.S. growth to accelerate from the 2% first-half pace, with AI…

— *Walter Bloomberg (@DeItaone) September 29, 2026

Bitcoin has held its ground so far. BeInCrypto noted that the cryptocurrency rose 13% after the last rate hike, driven by institutional buying. Over the past 24 hours, it gained only 0.2%, according to data.

The next major event comes Wednesday with the release of August PCE inflation data. A stronger-than-expected reading could push October rate hike odds back toward the 70% level seen on Monday.