Fed Rate Hike Odds Jump to 66% After Warsh’s Jackson Hole Signal — Jobs Report Looms
Market pricing for a Federal Reserve rate hike at the September 15-16 FOMC meeting climbed to roughly 66% on September 3, 2026, up from about 33% a week earlier, following Chair Kevin Warsh’s hawkish tone at the Jackson Hole symposium. The implied probability has since settled near 64% on CME FedWatch, while Johns Hopkins economist Steve Hanke puts his own estimate higher, at approximately 80%.
The shift marks a notable repricing of expectations just under two weeks before the central bank’s decision. Traders on the prediction platform Kalshi currently see a 55% chance of a 25-basis-point hike, a 46% chance rates stay unchanged, and only a 2% probability of a larger move.
Also read: Sberbank Moves to Accept Bitcoin, Ethereum, and USDT as Loan Collateral
Jobs Data Could Decide the Fed’s Next Move
Warsh’s case for keeping rates high — or raising them — rests partly on the resilience of the U.S. labor market. At Jackson Hole, he cited 4.1% unemployment and near-record-low jobless claims as evidence that the Fed still has room to tighten without causing meaningful harm to workers.
This week’s labor reports will test that view directly. The JOLTS release will show whether employers are still hiring or beginning to pull back. The ADP report offers an early read on private payroll growth. But the key figure arrives Friday, when the Bureau of Labor Statistics publishes nonfarm payrolls and the unemployment rate.
Also read: Bithumb Wins Two Lawsuits Over 620,000 BTC Credit Error, Recovers 99.7% of Funds
- Strong payroll numbers would reinforce the case for a September hike.
- Weak numbers would make that case harder for Warsh to defend.
The Fed will also receive PPI and CPI data in the week of September 8, just days before the meeting begins.
Steve Hanke Sees an 80% Chance of a Hike
Steve Hanke, a professor of applied economics at Johns Hopkins, expects a higher probability of a September increase than the broader market. Three FOMC members already voted for a rate increase at the previous meeting, and Hanke expects Warsh could join them and potentially sway additional colleagues.
Hanke acknowledged his view could change if economic data suddenly turned sharply weaker. However, he argued that strong monetary growth and nominal GDP conditions make such a slowdown less likely in the near term.
The Case Against a September Rate Hike
Not all market participants are convinced another hike is necessary. An analysis from Wellington-Altus argues that renewed price pressure could stem from a supply shock rather than strong demand. Supply shocks can move prices without creating a lasting inflation problem — unless higher costs spread into wages, broader prices, and inflation expectations.
The analysis also points to softening employment conditions and strain in interest-rate-sensitive sectors such as housing, construction, and consumer durables. Two-year inflation breakevens remain well anchored, and further tightening could complicate adjustments in supply, investment, and productive capacity.
Tom Lee Sees a Potential September Rally
Tom Lee, co-founder of Fundstrat and chairman of Bitmine Immersion Technologies, has revised his September outlook. Lee previously expected a market correction of roughly 10% this month. He now believes concerns about the Fed, AI spending, and seasonal weakness could instead help drive a rally.
In an interview with CNBC, Lee said the S&P 500 could surprise to the upside if the Fed leaves rates unchanged. He described the September 15-16 meeting as a possible turning point.
“If the Fed doesn’t hike, which is our base case, I think actually the markets could rally very strongly,” Lee said.
Lee also characterized Bitcoin’s recent rally as potentially the beginning of a much larger move.
Crypto Market Impact
Bitcoin is trading near $77,000, positioned between two key technical levels. Support sits at $76,000, while resistance is around $80,000. A decisive move above $80,000 on strong volume could give the broader altcoin market room to recover. A break below $76,000 would weaken the current setup and likely push traders to wait for a new support zone to form.
Ethereum is hovering around $2,400, with support at that level and resistance at $2,500. Solana is near $100, with the same figure acting as support and $110 as resistance. Directional movement in Bitcoin remains the primary driver for both assets in the near term.
For crypto traders, the FOMC decision carries particular weight. A hawkish surprise — a hike accompanied by guidance suggesting more to come — could strengthen the dollar and pressure risk assets. A hold, or a hike framed as a one-off, could provide the clarity markets have been lacking since the Jackson Hole repricing.
This article is for informational purposes only and does not constitute financial advice. Cryptocurrency and interest-rate markets are volatile and uncertain. Readers should conduct their own research before making investment decisions.
