US Fed Poised To Cut Interest Rates By 0.5%, Bitcoin & Altcoins To Rally?

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The US Fed is optimistic about the upcoming meeting, following the crucial US Job data this week. According to Citi analysts, the focus of the US Fed has shifted significantly from tackling inflation to assessing the job market health. Recent estimates predict that the US economy added 125,000 jobs in August, with the unemployment rate holding at 4.3%. This data, if confirmed, could pave the way for a more substantial rate cut of 50 basis points as the Federal Reserve aims to support a slowing labor market, the analysts predict. “The pivot from inflation to jobs is complete,” Citi analysts stated, emphasizing how employment metrics now play a crucial role in shaping Federal Reserve policy.

At their upcoming meeting, it’s anticipated that the U.S. Federal Reserve will lower interest rates by 0.5 percentage points. This decision comes after significant employment data released this week. As predicted by analysts from Citibank, the U.S. non-farm payroll report for August is expected to show an increase of 125,000 jobs, with the unemployment rate holding steady at 4.3%. According to these analysts, such data could provide the U.S. central bank with a rationale for implementing a more accommodating approach when making decisions about their policy rates in September.

It’s widely expected by analysts that the price of Bitcoin and other cryptocurrencies could surge.

US Fed To Cut Rates By 0.5% After Job Data

Based on a recent analysis by Citi experts, it appears that the primary concern of the U.S. Federal Reserve has undergone a significant shift – from combating inflation to evaluating the robustness of the job market. Recent projections suggest that the American economy added approximately 125,000 jobs in August, while maintaining an unemployment rate of 4.3%.

If verified, this data might open the path for a reduction in interest rates by 0.5 percentage points, as the Federal Reserve intends to bolster a decelerating labor market. Citigroup analysts asserted that the shift from inflation to employment has been accomplished, highlighting how employment metrics now hold significant influence over Federal Reserve policy, emphasizing its impact.

In contrast to past strategies, this shift signifies a significant change in the central bank’s focus from inflation control. Experts propose that the ongoing job market expansion, combined with increasing unemployment rates, hints at an economic downturn, potentially prompting the central bank to relax its monetary policies.

Additionally, Citi’s report underscores that minor adjustments in employment figures could greatly influence Federal Reserve decisions. For instance, if the U.S. job data suggests that the unemployment rate decreases slightly to 4.2%, the Fed might choose a more modest reduction of 0.25%. However, given indications of a broader economic slowdown, Citi predicts that the labor market will continue to weaken.

Bitcoin & Altcoins To Rally?

Discussions about a possible increase in interest rates have sparked debate on the potential surge in the wider financial market, encompassing Bitcoin and prominent altcoins. Lower rates often enhance market sentiment, increasing investor’s risk tolerance.

Based on current predictions, a potential interest rate reduction of 25 basis points by the U.S. Federal Reserve in September could help alleviate market participants’ concerns. Interestingly, according to the CME FedWatch Tool, there’s approximately a 61% chance of such a rate cut occurring this month, which is a decrease from the previously reported 70%.

In English: Meanwhile, in the US 10-year Bond Yield fell 1.94%, to 3.836 during writing. On the other hand, BTC price traded near the flatline at $58,111 at the same time, while the ETH price was down 1.7% to $2,463.

Instead of traditionally stating that historical data indicates Bitcoin typically experiences bearish trading in September, it’s important to note that recent market tendencies and on-chain data hint at the potential for Bitcoin’s price to buck the historical trend, demonstrating a potentially optimistic trading pattern in September.

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2024-09-03 18:42