Fed Rate Cuts: Gov Lisa Cook Expects Soft Landing, Bitcoin To Rally After Cooling CPI?

Federal Reserve Governor Lisa Cook anticipates a softer landing amid easing inflation and the labor market in the US, hinting at rate cuts starting soon by the Federal Reserve. Besides, the Fed Governor said that inflation should continue to cool off without a significant rise in the unemployment rate.

Notably, the market anticipates the Fed’s potential rate cut in September to trigger a major rally in stock markets and Bitcoin price.

Fed Governor Lisa Cook Upbeat on Soft Landing

At the Australian Conference of Economists 2024, US Federal Reserve Governor Lisa Cook talked about monetary policy response to the pandemic, rise and fall of inflation in recent years, and current common monetary policy challenges. Cook pointed out that the current data is evident for Fed rate cuts, aligning with other central banks on the pivot.

“My baseline forecast (and that of many outside observers) is that inflation will continue to move toward target over time, without much further rise in unemployment.”

Fed Chair Jerome Powell in a testimony also revealed the FOMC is focusing more labor market given the recent cooling CPI, PCE, and PPI inflation data.

Traders and Wall Street banks are pricing in a 25 bps rate cut in September. Also, CME FedWatch shows a rise in probability to 70%, from 46% a month ago, for a 25 bps rate cut on September 18. The data indicates two Fed rate cuts this year.

The market expects the U.S. Bureau of Labor Statistics to announce a fall in annual CPI inflation rate to 3.1%, as reported earlier by CoinGape.

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Bitcoin to Start Rallying After CPI

Bitcoin is bottoming out and market participants have already started buying, according to several factors. Traders expect BTC price to cross above $60,000 in case of a favorable CPI release.

CoinShares reported that institutional investors across the world have started buying Bitcoin and financial expert Robert Kiyosaki urged people to buy more BTC and gold as traditional investors have also started buying.

Spot Bitcoin ETFs in the U.S. continue to record inflows this week, with more than $800 million net inflow in the last four days. CoinGape also reported several traditional investment firms such as Fiduciary Alliance are pouring money into ETFs such as BlackRock Bitcoin ETF and GBTC.

10x Research predicts BTC price is bottoming and expects a surge in prices after CPI data today based on historical BTC price action in response to CPI.

“We anticipated that a rate cut rally could push Bitcoin near $60,000. Yesterday, Bitcoin rallied to $59,350 due to short covering ahead of the CPI, fulfilling our rally expectations,” said 10x Research CEO Markus Thielen.

BTC price currently trades near $58,000 after hitting a 24-hour high of $59,350. The price is down 1%, but still higher than the 24-hour low of 57,120. Furthermore, the trading volume has decreased by 13% as traders await key inflation data. Buying in derivatives markets are also low in the last 24 hours and total BTC futures remained at $28.90 billion.

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