Breaking: December Rate Cut Odds Jump to 70% After Fed’s John Williams Signals Near-Term Easing

The odds of a December Fed rate cut have rebounded massively today, providing a bullish outlook for Bitcoin and the broader crypto market, which are facing an intense sell-off. The rebound in the rate-cut odds follows New York Fed President John Williams’ speech, in which he opened the door to another near-term cut.

December Fed Rate Cut Still Play Following John Williams’ Remarks

CME FedWatch data shows that the odds of a 25-basis-point (bps) rate cut have climbed to almost 71% following John Williams’ speech. This follows an earlier drop earlier this week, as hopes of a cut next month faded due to several factors.

As CoinGape reported, the odds of a 25 bps Fed rate cut dropped to as low as 33% following the BLS cancellation of the October jobs report. However, traders began increasing their bets on a December cut yesterday following the release of the September jobs report, which, in part, suggested that the labor market was still weakening, with a rise in unemployment.

Now, Fed President John Williams has further revived hopes of a December cut. In his remarks at the Central Bank of Chile Centennial Conference, he stated that he still sees room for near-term adjustment to the target range for the federal funds rate to move to a more neutral policy stance, thereby maintaining the balance between their dual mandate.

This came as he admitted that monetary policy was still modestly restrictive, with more room to come down. As such, this has raised the possibility that the Fed president will support another rate cut at the December FOMC meeting.

The Bitcoin price bounced on the back of this development, rising from an intraday low below $82,000 to as high as $83,800. A potential rate cut marks a positive for BTC amid this market sell-off. Notably, the flagship crypto had surged to new all-time highs (ATHs) earlier this year just before the Fed lowered rates at the September and October meetings.

Other Fed Officials Give Differing Views

While John Williams signaled openness to another Fed rate cut in December, some other Fed officials have given differing views. According to a Bloomberg report, Boston Fed President Susan Collins said that she is more concerned about inflation right now than the softening labor market.

As such, she believes that holding rates steady is appropriate for now with inflation likely to stay elevated for some time. She noted that the labor market appears to be cooling, but not rapidly. In a separate interview on CNBC, the Fed President alluded to the September jobs report, stating that it didn’t significantly change her outlook for the labor market.

Dallas Fed President Lorie Logan also echoed Collins’s sentiment, stating that it would likely be appropriate to keep interest rates unchanged at the December FOMC meeting. She signaled that she is against a Fed rate cut so as to ensure they do not ease aggressively and then have to hike rates later on.