Fed Rate Cuts Likely After This Final Hurdle, Says US FOMC Member Collins
Highlights
- Boston Fed President Susan Collins said the US Federal Reserve could begin easing interest rates.
- Fed officials are awaiting the CPI inflation data release next week for moving closer to rate cuts.
- Matrixport expects a relief rally in Bitcoin after the upcoming inflation data.
US Federal Reserve Bank of Boston President Susan Collins on Friday said it is appropriate now for the US Federal Reserve to start interest rate cuts. Moreover, the consumer price inflation (CPI) inflation data remains the last hurdle before the much-awaited Fed rate cuts.
Fed Collins Agrees On Starting Rate Cuts By US Fed
Boston Fed President Susan Collins, in an interview with the Providence Journal, said the US Federal Reserve could begin easing interest rates provided that CPI inflation release cool further amid a strong labor market. The latest weekly jobless claims fell more than expected, driving a rebound in the market.
“If the data continue the way that I expect, I do believe that it will be appropriate soon to begin adjusting policy and easing how restrictive the policy is,” Collins said. “My outlook is for continued gradual reduction back to our 2% target amid a healthy labor market.”
She refused to provide more detail on the timing and extent of the Fed rate cuts, but confirmed lower interest rates in the next few years. “We’ll have more data before our September meeting, and I don’t want to get out ahead of that,” said Susan Collins.
The U.S. Bureau of Labor Statistics will release the CPI data on Wednesday, August 14. The annual CPI inflation rate in the US fell for a third straight month to a low of 3% last month. Economists estimates annual CPI inflation for July to come at 2.9%.
Recently, JPMorgan predicted Fed rate cuts by half a percentage point in September. The Wallet Street giant recently raised the odds of a US recession to 35% by the end of the year, up from 25% as of the start of last month. Notably, CME FedWatch tool shows a 54.5% chance of a 50 bps rate cut in September.
Bitcoin To Rally Next Week?
Crypto research firm Matrixport in a recent post on X said Bitcoin is oversold. The firm expects a relief rally in Bitcoin after the upcoming inflation data including PPI on Tuesday and CPI on Wednesday.
Bitcoin traders can respond positively if the CPI data comes in lower than 3%. Matrixport claimed it warned its clients that trading volumes and liquidity have remained low historically in August. It adds that the trading ecosystem will remain challenging in the coming weeks. However, the odds of Fed rate cuts will see a significant boost.
BTC price trades above $60,000 on the options expiry day, which is in line with the max paint point. The price jumped more than 6% in the past 24 hours, with a 24-hour high of $62,673. Furthermore, the trading volume remains low today.
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