The Federal Reserve's rate decision has become one of the least surprising events on Wall Street.

Markets are assigning roughly a 94% probability to a quarter-point interest-rate increase, according to CME's FedWatch measure cited in recent reporting. That would take the federal funds target range to 3.75%-4.00% and mark the first U.S. rate increase since 2023.

So why are stocks, bonds, currencies and cryptocurrencies still moving nervously?

Because investors are no longer trading the question of whether the Fed will hike.

They are trading the much more important question:

How many more hikes might come after this one?

That shift has transformed Wednesday's meeting from a simple rate decision into a test of the Federal Reserve's entire inflation strategy.

At the center of the market's attention is Chair Kevin Warsh.

Only weeks ago, expectations for a September hike were far less certain.

Then inflation data refused to cooperate.

August headline consumer inflation rose 3.4% year over year, while core inflation was around 2.4%-2.5%, depending on the measure cited. The figures remain above the Fed's 2% target.

Meanwhile, oil prices have risen dramatically.

Brent crude moved above $100 as Middle East disruptions threatened supplies.

Treasury yields surged above 5%.

Those developments reinforced the idea that the Fed cannot afford to ignore renewed inflation pressure.

The market response was rapid.

The probability of a hike jumped from below 50% in August to more than 90% ahead of Wednesday's decision.

At this point, a 25-basis-point hike would barely qualify as a surprise.

The bigger disagreement lies beyond September.

According to Yahoo Finance's report, most major banks expect additional tightening this year, with several predicting roughly 50 basis points of total increases.

Bank of America, Deutsche Bank and RBC have been more hawkish, projecting as much as 75 basis points of tightening during the year.

Goldman Sachs sits toward the less aggressive end, expecting the September quarter-point increase but no additional hike in 2026. Jefferies is even more cautious, expecting a later cut.

That range tells investors something important.

Wall Street does not disagree much about Wednesday.

It disagrees significantly about December.

And that disagreement is where the next major market move could come from.

Interest rates affect financial markets through several channels.

Higher rates make borrowing more expensive.

They can discourage consumer spending and business investment.

They make bonds more attractive relative to stocks.

And they raise the discount rate used to value future corporate earnings.

That last effect is particularly important for growth companies.

If an investor expects a company to earn most of its profits years into the future, higher interest rates reduce the present value of those earnings.

That can pressure high-valuation technology companies even if their actual businesses remain strong.

This is one reason the recent jump in Treasury yields has created so much volatility in AI and technology stocks.

The initial reaction to a rate hike can be negative.

But the longer-term outcome depends on the economy.

If the Fed raises rates because growth is strong and inflation is manageable, stocks can continue rising.

If the Fed raises rates as the economy weakens and corporate earnings deteriorate, the impact can be far more severe.

That is why investors are watching economic growth as closely as inflation.

The perfect outcome for stocks would be a Fed that controls inflation without causing a recession.

The difficult scenario is inflation remaining high while growth deteriorates.

That would leave policymakers with far fewer attractive options.

The bond market is arguably more important than the stock market right now.

The 10-year Treasury yield recently reached around 5%, its highest level since 2007.

That is significant because long-term Treasury yields affect the broader cost of capital.

If the 10-year remains around 5%, corporate borrowing becomes more expensive.

Mortgage rates face pressure.

Equity valuations face a higher discount rate.

And government debt servicing becomes increasingly costly.

The Federal Reserve does not directly control the 10-year Treasury yield.

The market does.

That means investors could effectively tighten financial conditions even more aggressively than the Fed does.

The U.S. dollar has strengthened alongside Treasury yields as investors price tighter monetary policy.

A strong dollar can reinforce the tightening effect.

Dollar-denominated debt becomes more expensive for foreign borrowers.

Commodity prices become harder to absorb for emerging-market economies.

Capital can move toward U.S. assets.

That can produce a feedback loop in which the same policy that supports the dollar also tightens global financial conditions.

Cryptocurrency markets are particularly sensitive to changes in liquidity.

When investors expect lower rates and abundant liquidity, speculative assets can benefit.

When rates rise and the dollar strengthens, those assets can face pressure.

Bitcoin is already dealing with uncertainty after the Senate failed to advance the CLARITY Act, while macroeconomic expectations are becoming more hawkish.

That creates a difficult environment for traders.

Crypto has a potential regulatory catalyst if Congress eventually revives market-structure legislation.

But the Federal Reserve is delivering a monetary headwind at the same time.

The rate decision is also taking place against a backdrop of tension between the White House and the Federal Reserve.

President Donald Trump has publicly advocated for lower borrowing costs.

Warsh, meanwhile, is under pressure to demonstrate that the Fed's policy decisions remain guided by inflation and economic data.

That means the post-meeting press conference could receive extraordinary scrutiny.

Investors will listen not only for economic signals but also for signs of how firmly the central bank intends to defend its independence.

A hike would not.

That is already priced in.

The potential surprises are elsewhere.

A stronger-than-expected signal for additional hikes could send the dollar and Treasury yields higher and put pressure on stocks.

A more cautious message could push yields lower and potentially give equities and crypto a relief rally.

An unexpected hold would be much more dramatic.

Some analysts have warned that if the Fed does not hike, the dollar could fall sharply because markets have assigned such a high probability to the move.

That demonstrates just how asymmetric expectations have become.

Investors will closely examine the central bank's updated economic projections.

The policy rate tells markets what the Fed is doing now.

The projections offer clues about what policymakers think comes next.

If the median projection points toward more tightening, markets could reprice rapidly.

If the projections indicate that officials expect to stop after this move, the bond market could rally and the dollar could weaken.

And if policymakers are divided, traders could focus heavily on the details of the vote.

The message will matter as much as the number.

One of the biggest complications is energy.

Crude prices above $100 are raising the risk of another inflation wave.

But rate hikes cannot fix a damaged oil pipeline.

They cannot make shipping routes safer.

They cannot produce more crude.

The Fed therefore has to determine whether the energy shock is temporary or whether it could influence broader inflation expectations.

If oil retreats, some of the pressure could disappear.

If oil remains elevated, the Fed may face another difficult meeting later this year.

This may be the cleanest way to understand Wednesday's market.

The September decision is nearly settled in traders' minds.

The December decision is not.

That is where the uncertainty lies.

Goldman expects one hike.

Several major banks expect more.

The bond market appears concerned about persistent inflation.

The dollar is reflecting expectations for higher U.S. yields.

Oil remains elevated.

And the Fed has a new chair trying to establish credibility at an extraordinarily complicated moment.

The coming hours will therefore be less about the 25 basis points themselves and more about the trajectory they represent.

Because Wall Street has already placed its bet that the Fed will hike.

Now investors are waiting to find out whether that is the first move of a new tightening cycle — or the last move the central bank will need to make for a while.