[DigitalToday Seung-a Yoo, intern reporter] The likelihood of a 0.25 percentage point increase in the U.S. Federal Reserve's benchmark rate has jumped to 94.5 percent, with Wall Street treating a hike as a fait accompli.

Decrypto, a blockchain media outlet, reported on Sept. 15 local time that if the increase is implemented, the federal funds rate would rise to 3.75 percent to 4 percent from 3.50 percent to 3.75 percent.

The Federal Open Market Committee wraps up a two-day meeting on Wednesday. CME FedWatch shows the probability of a 0.25-point hike has surged to 94.5 percent from below 50 percent a month ago. A Wall Street Journal survey conducted this week also found most major banks expected a September hike. Barclays, Citigroup, JPMorgan, Morgan Stanley and UBS projected a total of 50 basis points of additional increases by year-end. Bank of America, Deutsche Bank and RBC expected an additional 75 basis points. Goldman Sachs projected only a 0.25-point hike this week, while Jefferies and Oxford Economics expected rate cuts in December and 2027, respectively.

Market focus is turning to the path of rates after the decision rather than the increase itself. Higher rates raise borrowing costs, slow consumption and increase pressure on risk assets such as stocks and bitcoin that benefit from a low-rate environment. At the same time, higher yields on safe-haven Treasury bonds could pull money out of risk assets. Markets are watching the uncertainty over how many additional increases could follow and have been pricing that in even before the Fed's decision.

The rising outlook for a hike is driven by high inflation and strong employment. The August consumer price index rose 3.4 percent year on year, and core inflation rose 2.5 percent, both above the Fed's 2 percent target. Higher oil prices linked to conflict with Iran also increased inflation pressure. The Fed held rates at 3.50 percent to 3.75 percent in July, but the vote was split 9 to 3, with 3 policymakers calling for an increase. A stronger-than-expected August jobs report has also reinforced expectations for tightening ahead of this meeting.

The decision is also expected to add to political pressure. U.S. President Donald Trump has publicly pressed for rate cuts over the past two weeks after nominating Kevin Warsh (케빈 워시) as Fed chair in January. U.S. Vice President JD Vance (JD 밴스) and U.S. Treasury Secretary Scott Bessent (스콧 베선트) have also called for rate cuts. Warsh said Trump's actions did not influence the Fed's decision.

The expected hike is also drawing attention because it would come two months before the November midterm elections. With voters' dissatisfaction over high prices and borrowing costs continuing, Trump's tariff policy and the Iran conflict are being cited as factors adding to inflation pressure.

Bond markets have already moved. The yield on the 10-year U.S. Treasury note rose to as high as 5.04 percent this week, the highest since July 2007, and the policy-sensitive 2-year yield climbed to its highest level since July 2024. Rising Treasury yields can increase Treasuries' relative appeal and drive dollar strength, which could weigh on cryptocurrencies that benefit from a low-rate environment.

Bitcoin is already showing weakness. On Tuesday, bitcoin traded at about $75,700, down 3.2 percent on the day. The decline also coincided with the Clarity bill, a crypto market structure bill, failing to pass a Senate cloture vote. Bitcoin has retreated sharply from its September high of about $82,000.

Some analysts say the increase does not have to be seen as negative for cryptocurrencies. If a 0.25-point hike focuses on stabilising long-term Treasury yields rather than significantly tightening financial conditions, the impact on the medium-term crypto trend could be limited. In that case, how much the Fed decision and Warsh's news conference deliver unexpected signals compared with what markets have already priced in would become important.

Some have raised the possibility that altcoins, which have relatively low liquidity and high leverage, could move more sharply than bitcoin depending on the rate decision.

The Fed will release a statement and an updated dot plot at 2 p.m. Eastern time on Sept. 16, which is 3 a.m. on Sept. 17 in South Korea, and Warsh will hold a news conference from 2:30 p.m. Markets are expected to watch whether the Fed signals only 1 additional rate hike this year or points to the possibility of 2 more increases, as projected by Bank of America, Deutsche Bank and RBC.