CME FedWatch data shows an 89% chance of the Federal Reserve lowering rates, following a cooling labor market in the US.
Current Situation on Rate Cuts
In July, job creation in the US fell significantly short of expectations, reinforcing investor anticipations of a potential Fed rate cut. Revisions for previous months removed hundreds of thousands of positions from the official count, serving as an additional signal for the central bank.
Expert Opinions on the Need for Rate Cuts
Michelle Bowman, one of the vocal Fed policymakers, has argued that cuts should begin sooner rather than later to avoid the need for more abrupt measures later on. She emphasizes the importance of protecting employment amid current inflation risks. This view is echoed by Minneapolis Fed President Neel Kashkari and San Francisco's Mary Daly. Bowman even floated the possibility of rate reductions at all remaining Fed meetings in 2025.
Impact on the Crypto Market
Rate reductions typically imply increased liquidity in the market, which can positively affect crypto assets, as has been observed in previous cycles. Crypto markets traditionally thrive under these conditions, suggesting significant potential price increases for digital assets.
With the evolving situation and a softer monetary policy stance, September may herald a turning point for both traditional markets and the cryptocurrency sector.
