Market anticipates further cuts, impacting financial assets.
Federal Reserve Governor Christopher J. Waller stated his support for a 25 basis-point rate cut at the upcoming September meeting due to current labor market data.
This monetary policy stance suggests potential impacts on cryptocurrencies like BTC and ETH, influencing market dynamics and investor behavior due to expected further rate cuts in the next months.
Christopher Waller and Michelle Bowman, both Federal Reserve Governors, advocate a 25 basis-point rate cut, raising expectations for easing monetary policy. Waller cites labor market data and inflation as key considerations in supporting his decision. The potential rate cuts signal concerns over economic resilience, with Waller emphasizing the need to monitor August job statistics for economic indicators.
Lowering interest rates is anticipated to encourage risk-on sentiment among investors, with potential shifts away from USD assets toward alternative investments, such as cryptocurrencies. Analysts suggest that the dovish stance could reduce the opportunity cost of holding non-yielding assets and drive capital toward high-growth sectors.
“I favored reducing the federal funds rate by 25 basis points at the FOMC’s July meeting, and subsequent data on the labor market and inflation indicate this was the right call. That also seems to be the message from financial markets, which now expect a 25-basis-point cut at the FOMC’s September meeting and put significant odds on an additional one or two cuts at the final two meetings of 2025.” — Christopher J. Waller
Did you know? In March 2020, the Federal Reserve’s emergency rate cuts preceded a notable rise in BTC, illustrating the impact of monetary policy shifts on cryptocurrency markets.