The Federal Reserve is expected to lower interest rates, which could benefit Bitcoin (BTC) and other cryptocurrencies.
A September rate cut seems almost certain. The main question is whether the cut will be by 25 or 50 basis points. However, an economist at JP Morgan suggested that the Fed is likely to cut rates by 50 basis points in September.
While appearing on CNBC’s Squawk Box, JP Morgan Chief Economist Michael Ferroli said the Fed should opt for a 50 basis point rate cut at its September meeting.
Ferroli mentioned that ideally the central bank’s target rate should be around 4%, which is 150 basis points below the current level.
He said that although inflation remains slightly above target, unemployment may be slightly higher than that consistent with full employment.
Both inflation and employment pose risks, but if either of these risks becomes significant, adjustments could be made in the strategy to reduce interest rates
Meanwhile, data from the CME FedWatch tool shows that investors expect the Fed to cut rates by 25 basis points in September with a 57% probability, and a 50 basis point cut is estimated at 43%.
Federal Reserve meetings usually follow a predictable pattern, but this week’s Federal Open Market Committee (FOMC) gathering was shrouded in uncertainty.
At the Token2049 event on September 18, Arthur Hayes, co-founder of BitMEX, warned that upcoming interest rate cuts by the U.S. Federal Reserve could trigger a major downturn in the crypto market.
Cryptocurrency investors are closely watching the Federal Reserve’s interest rate decision set for tomorrow.
BlackRock Investment Institute is skeptical about the Federal Reserve implementing as many rate cuts as the bond market anticipates.