The Federal Reserve is stuck in the monetary policy equivalent of being told to speed up and slow down at the same time. Nearly half the central bank’s policymakers want to raise interest rates before the year is out, even as the latest jobs data suggests the labor market is starting to crack under existing pressure.
At the June FOMC meeting, the Fed held the federal funds rate steady at 3.50%-3.75%. But the updated dot plot told a more hawkish story: nine of 19 policymakers projected at least one rate hike by the end of 2026. For crypto markets already nursing a brutal drawdown, the signal landed like a cold shower.
A labor market that’s losing steam
The July 2 employment report threw a wrench into the rate-hike narrative. Payroll growth came in substantially below expectations for the prior two months, the kind of miss that forces traders to recalibrate in real time.
Markets slashed the probability of a July rate increase to below 20%, down from what had been a consensus leaning toward two hikes for 2026.
