Today, we mentioned that the upcoming JOLTS data could provide an important signal about the economic outlook. The data, reflecting the current state of job opportunities, favored risk markets, including cryptocurrencies. Naturally, following this, we saw an improvement in predictions regarding the rate cut cycle. As this article was being prepared, Fed member Bostic was speaking.
How Much Will the Fed Cut Rates?
Interest rates, which have been kept at their peak for over a year, will start to fall due to the Fed’s struggle with excessive weakening in employment. Powell had clearly conveyed this message during his Jackson Hole speech. We noted that the recent data brought significant positive developments for cryptocurrencies.
The Bank of Canada cut rates by another 25bp today, marking the third rate cut of the year after inflation fell to a 40-month low. The European Central Bank also made its first cut of the year a few months ago. Now, following the JOLTS data, it is believed that the Fed will cut rates by 50bp instead of 25bp. Market expectations have improved.
Fed member Bostic is giving positive messages about the cuts as this article is being prepared. Key points from his speech are as follows:
“The latest inflation reports strengthen my belief that inflation is on a sustainable path towards 2%. A soft landing for the economy might be near. We should not maintain a restrictive policy stance for too long. Business contacts indicate a loosening but still generally stable labor market. The labor market continues to weaken, but it is not weak. I now give as much importance to the maximum employment goal as I do to inflation. The Fed must remain vigilant to ensure that inflation risks continue to diminish. I am not fully ready to declare victory over inflation as risks persist.”
BTC price has recovered slightly with the incoming data.
