Crypto analyst Crypto Rover (@rovercrc) tweeted that the markets currently expect a 92 percent chance that Federal Reserve will cut rates in September. The positivity is after a poor July jobs report, whereby the economy has been recording a decrease in the labor market, adding only 100,002 instead of expected 226,000 jobs in this report. Analysts consider that the smaller cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) will also gain in case Powell makes this step, and the former may aim to surpass the $70,000+ mark. Stocks also look ready to recover, particularly tech-weighted market indices.
Powell ito be Data-Dependent
Jerome Powell does not share market optimism, insisting that new August inflation and employment figures will be important. Even though traders are optimistic, there are risks such as stagflation, tariffs, and pressures of the global markets that might affect the Fed verdict. Reduced interest rates will lower the cost of borrowing money by companies and may fuel sharehold buyback which promotes increased valuations.
Nevertheless, Jerome Powell is not very optimistic, emphasizing that the decision of the Fed will depend on the upcoming inflationary and employment rates. Powell has mentioned severally that monetary easing will come only when economic conditions warrant it, not making any rash decisions to stimulate the economy at the expense of triggering another inflation.
Despite the good anticipation, there might be obstacles that may slow-down or diminish the rate decreasing. Should inflation inch up in August or September, the Fed may lower its rate by less, or wait, which may scare overly optimistic markets.