As we announced early this Sunday, Jackson Hole is happening, and Powell will make statements here. Recent data forces the Fed to cut rates, but market expectations weakened the pricing of a 50bp cut after last week’s volatile data. However, Evercore analysts made a bold prediction.
Fed Will Cut Rates by 50bp
A 50bp rate cut in September could lay the groundwork for significant rises in the crypto market. In fact, even in the dot plot, the annual expectation was first 75 then 25bp and below. This could indicate that the sudden change will relatively quickly open the door to the normalization of rates. Evercore ISI analysts wrote:
“We think Powell‘s speech will be reassuring and consistent with a series of soft 25s, but he will convey that the Fed is open to 50s and that the bar for this is not very high.”
Evercore ISI says Powell will likely describe the Fed as “flexible and agile.” This means the Fed could signal that it can cut rates much faster if needed after the initial cut.
“The important thing is not the size of the cuts, but how successfully Powell differentiates between data and reaction function.”
