The US Fed is likely to announce a 50 bps rate cut following job data showing 125,000 jobs added and a 4.3% unemployment rate, which may prompt a softer policy stance in September.
Following the critical US job data this week, the US Federal Reserve is anticipated to announce a 50 basis point rate reduction at their forthcoming meeting.
According to Citi analysts, the unemployment rate is expected to be 4.3%, and the US non-farm payroll data is anticipated to indicate a 125,000 job increase in August. The analysts believe that this data could assist the US central bank in adopting a more lenient policy rate plan in September.
Nevertheless, market observers are predicting a potential increase in the prices of Bitcoin and altcoins.
The United States Federal Reserve is expected to reduce rates by 0.5% in response to the recent job data.
The US Federal Reserve has substantially shifted its emphasis from inflation management to the evaluation of the employment market, as indicated by a recent report that cites Citi analysts. The unemployment rate is expected to remain at 4.3%, while the US economy is expected to add 125,000 jobs in August, according to recent estimates.
The analysts anticipate that the Federal Reserve may implement a more considerable rate cut of 50 basis points in order to mitigate a slowing labor market, should this data be verified.
Citi analysts emphasized that employment metrics now play a critical role in determining Federal Reserve policy, stating that the pivot from inflation to jobs is complete.
In the interim, this represents a significant departure from the central bank’s previous inflation-centric strategy. According to analysts, the central bank is being compelled to ease monetary policy as a result of the weakening economy, which is indicated by the present job growth levels and the increasing unemployment rate.
Furthermore, Citi’s report underscores that even minor modifications to employment data could have a substantial influence on Federal Reserve decisions. For instance, the Federal Reserve may implement a 25 basis point reduction in the interest rate if the unemployment rate in the United States decreases to 4.2%.
Nevertheless, Citi continues to anticipate that the labor market will continue to weaken, despite the presence of indicators of a broader economic downturn.
Bitcoin and alternative cryptocurrencies are expected to experience a surge in value.
The broader financial market, including Bitcoin and the top altcoin prices, has been the subject of speculation regarding a potential rally due to the anticipation of a more substantial rate cut. The market sentiment is typically bolstered by the reduced rates, which in turn increases the risk-bet appetite of investors.
However, the market participants’ apprehensions may be alleviated by the forthcoming rate cut in September, in addition to the two additional rate cuts anticipated this year.
It is important to note that the CME FedWatch Tool indicates a 61% likelihood of a 25 bps rate reduction by the US Fed in September. It represents a decrease from the 70% that was recently observed.
In the interim, the US 10-year Bond Yield decreased by 1.94% to 3.836 at the time of writing. Conversely, the price of Bitcoin (BTC) was hovering around $58,111, while the price of Ethereum (ETH) plummeted by 1.7% to $2,463.
It is important to mention that historical data indicates that Bitcoin typically experiences bleak trading conditions in September. Nevertheless, on-chain data and recent market trends suggest that the BTC price may defy historical trends, resulting in a positive trading scenario in September.
