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Highlights
- Standard Chartered predicts a 50bps Fed rate cut at next week’s FOMC meeting, doubling its earlier 25bps forecast.
- The outlook follows August’s weak jobs report, with unemployment rising to 4.3%, the highest in nearly four years.
- A rate cut could boost risk assets like Bitcoin, fueling bullish momentum in the crypto market.
The crypto market could be set for a bullish run as Standard Chartered forecasts a 50bps Fed rate cut next week. This is in light of the upcoming FOMC meeting.
Standard Chartered Forecasts 50bps Fed Rate Cut
Standard Chartered has predicted that the Federal Reserve will slash interest rates by 50 basis points at its upcoming policy meeting. This is double its earlier forecast of a 25-bps move. The shift follows August’s jobs report. It revealed the weakest labor growth in nearly four years, with unemployment climbing to 4.3%.
The bank’s analysts compared the current situation to last year, when a surprise half-point Fed rate cut was introduced under similar conditions. In its latest note to clients, Standard Chartered said the labor market had gone from “solid to soft in less than six weeks.” They argued that the Fed must act decisively to avoid further economic weakness.
Other banks remain divided. Barclays and Bank of America see smaller, more gradual cuts ahead. Morgan Stanley and Deutsche Bank are skeptical of an immediate 50-bps reduction, but all agree that easing is now firmly on the table. Fed Chair Jerome Powell has already acknowledged rising risks to the labor market, while warning that inflation pressures have not fully abated.
Furthermore, the CME FedWatch Tool shows a 90% probability of a 25-bps reduction. It, however, forecasted a lower 10% chance of a full 50-bps cut at the FOMC meeting. Upcoming CPI and PPI data, scheduled for release on September 10 and 11, could further sway the Fed’s decision.
Financial markets are now anticipating a potential adjustment of the Fed rate target range from 4.25%–4.5% down to 4%–4.25%. It would be very beneficial for risk assets, especially cryptocurrency.
Crypto Market Turns Bullish as Fed Officials Signal Support for Cuts
For the crypto sector, the growing likelihood of a Fed rate cut has increased bullish sentiment. According to analysts, a more lenient monetary policy encourages investment in riskier assets, such as Bitcoin, by lowering financing costs and steepening the yield curve.
Fed officials themselves appear increasingly open to action. Governor Chris Waller told CNBC that the central bank should “start cutting rates at the next FOMC meeting.” He suggested that this could be the first of several reductions over the next six months. He dismissed concerns about inflation, noting that the Fed can remain flexible in its approach.
Similarly, Fed Governor Michelle Bowman has publicly urged her colleagues to move forward with a September cut. She cited the need to protect the softening labor market. Bowman also argued that failing to act could risk deeper economic erosion.
This Standard Chartered Fed rate forecast has built up anticipation on Wall Street and in the crypto sector. If the Fed implements a cut, Bitcoin and other digital assets may be among the biggest beneficiaries.
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