Major Central Bank Decisions in the US, UK, and Japan Pose Rate Headwinds for Bitcoin

Bitcoin traded near $77,800 at the start of the week as financial markets braced for policy decisions from three major central banks within a 72-hour window. The Federal Reserve, the Bank of England, and the Bank of Japan are all scheduled to deliver interest rate updates, with expectations tilting away from monetary easing.

According to CME FedWatch data, market participants assign a probability of nearly 86% to a 25-basis-point rate hike by the Federal Reserve, which would lift the benchmark target range to 3.75%–4.00%. The shift in expectations followed August economic reports showing annualized consumer price inflation at 3.4%, alongside stronger-than-expected non-farm payroll additions of 162,000 jobs and an unemployment rate of 4.1%. Fed Chair Kevin Warsh had previously indicated at the Jackson Hole symposium that underlying inflation was not showing significant improvement.

Elsewhere, the Bank of England is widely expected to hold its key interest rate at 3.75% while potentially slowing its pace of quantitative tightening. Meanwhile, a Reuters survey shows 97% of economists anticipate the Bank of Japan will raise its key rate to 1.25%, adding to the tightening momentum across global central banks.