Federal Reserve Governor Michael Barr voiced support for hiking interest rates again if inflation fails to cool. Speaking at the Second Chance Lending Forum in Washington on September 1, 2026, the voting member of the Federal Open Market Committee (FOMC) was responding to price data that remains stalled above the central bank’s target.
Polymarket data immediately reacted to the remarks, pricing the probability of a rate hike before the end of 2026 at 72%. This new figure tops the 68% recorded after last month’s Jackson Hole symposium and surpasses the 64% seen in early August. For the upcoming meeting on September 15-16, the odds of a 25-basis-point increase sit around 57%.
Pressured by Tariffs, AI, and Middle East Conflict
The headline annual Personal Consumption Expenditures (PCE) report remained stuck at 3.7%, with core PCE trailing at 3.3% - both hovering above the central bank’s 2% target. The decline in inflation from its peak of 7% in 2022 to around 2% in early 2024 has stalled amid newly implemented tariff policies, surging demand from the artificial intelligence sector, and the fallout of conflict in the Middle East.
Tensions between the United States and Iran in the Strait of Hormuz have also raised additional energy inflation concerns. Figures cited by Fed Chair Kevin Warsh at Jackson Hole show that 54% of the 199 goods and services categories in the PCE gauge recorded price gains exceeding 3% over the past 12 months. Warsh has reiterated that the Fed’s 2% ceiling remains a fixed benchmark, while other policymakers such as Neel Kashkari, Hammack, and Lorie Logan have pushed for rate hike options since July’s meeting.
Why Crypto Liquidity Is Under Threat
The yield on two-year U.S. Treasuries has climbed to 4.31%. Meanwhile, the 30-year bond yield reached 5.28% - marking its highest level since before the 2008 financial crisis.
BTSE Chief Operating Officer Jeff Mei warned that elevated benchmark rates risk draining the free liquidity flowing into Bitcoin and altcoin ecosystems. The FOMC meeting in mid-September will set the tone for the crypto market’s trajectory in the coming weeks.
With traditional instruments offering annual returns exceeding 5% without volatility risk, crypto assets need more compelling drivers than merely serving as a store of value to keep attracting fresh capital.
Source: crypto.news.
Previously: Fed Rate Hike Odds Touch 57% - Bitcoin’s Fate Now Rests on ETF Buyers
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
