The US Fed’s July meeting minutes have strengthened expectations for a rate cut in September. This suggests potential changes in the financial and cryptocurrency sectors.
Fed Meeting Outcomes
The Fed’s July meeting minutes revealed a lean towards a more accommodative monetary policy. Most participants believed that a rate cut would be appropriate if economic data continued to support this decision. This would mark the first rate reduction since the emergency measures during the early days of the COVID-19 crisis. While the Federal Open Market Committee (FOMC) voted to keep rates steady in July, several members expressed a desire to begin easing as early as that meeting.
Crypto Market Reaction
The crypto market rose following the release of the US Fed minutes from their July meeting. The global crypto market cap was up by over 2% to $2.14 trillion. BTC price increased around 3% and traded over the $61,000 mark, while ETH price rose 1.5% to $2,635. According to the CME FedWatch Tool, there is a 62% probability of a 25 basis point cut by the US central bank in September.
Impact on Financial Markets
Expectations for a September rate cut have fueled optimism in the broader financial markets, with the crypto sector poised to benefit significantly. Lower interest rates generally boost market confidence, encouraging greater investor participation. The Fed acknowledged forecasts of rising unemployment and a downgraded economic outlook for the latter half of 2024. The US dollar index slipped 0.31% to 100.982, while the US 10-year Bond Yield plunged 0.97% to 3.782.
A rate cut could be the catalyst for a new rally in the cryptocurrency market, enhancing investor sentiment and increasing trading volumes.
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