The Federal Reserve is expected to leave interest rates unchanged on Wednesday, but uncertainty surrounding the decision has reached its highest level in years as investors debate whether policymakers are prepared to resume tightening.

Although economists largely expect no move this week, markets have increased bets on a rate hike, with traders pricing in a 32% chance of an increase as of Tuesday night. Many investors now see September as the more likely point for action.

Inflation concerns have intensified after renewed Middle East tensions pushed oil prices higher, raising fears that energy costs could slow progress toward the Fed’s 2% inflation goal.

Additional inflationary pressures are coming from President Donald Trump’s tariffs on imported goods and heavy investment in AI-related data centres, which has increased costs for semiconductors, equipment and power.

The latest inflation data provided some relief for policymakers. June consumer prices increased 3.5% annually, compared with 4.2% in May, while core inflation slowed to 2.6% from 2.9%. The decline was mainly linked to lower energy-related pressures.

Still, inflation has remained above the Fed’s 2% objective for more than five years, increasing pressure on officials to act. Fed Chair Kevin Warsh recently told Congress that he had “no tolerance” for continued elevated inflation as he prepares for his second policy meeting.

After dipping below $63,000 on Tuesday, Bitcoin rebounded above $64,000 ahead of the Fed’s policy announcement.

Even so, digital assets are likely to remain sensitive to any changes in the central bank’s outlook, with traders watching closely for signals on whether officials still expect to resume tightening later this year.