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%.
JPMorgan Chase CEO Jamie Dimon recently raised concerns about the U.S. economy, citing the potential impact of inflation and increasing deficits.
Goldman Sachs strategists, led by Christian Müller-Glissmann, are forecasting greater resilience in the U.S. stock market than many investors expect, suggesting a low probability of a severe recession.
Recent indicators suggest that the U.S. may avoid a recession in 2024, reversing earlier concerns.
US inflation fell to 2.5% in August, setting the stage for the Federal Reserve to consider cutting interest rates at its meeting next week.