The markets are paying close attention to possible rate cuts and how they might affect asset prices in the coming months as the Federal Reserve’s main meeting gets approaching.
A Bloomberg poll of 114 economists found that 104 thought the Fed would cut interest rates by 25 basis points, which would be the first time in four years that rates were lowered. Nine economists thought rates would be lowered by 50 basis points.
QCP Capital said that market players thought there was a 66% chance of a 50 basis point (bps) cut at the Federal Open Market Committee (FOMC) meeting on September 18, and a 33% chance of a 25 basis point cut. As of September 16, CME FedWatch data showed that a 50-bps cut was 61% likely. This was an enormous increase from the week before, when it was only 14% likely.
Impact of Fed Rate Decision Unclear
Analysts at QCP Capital pointed out that there was an abundance of doubt about what the interest rate cuts might mean. In a note to investors, they said that the final decision, Dot plot forecasts, and Federal Reserve Chair Jerome Powell’s comments after the meeting could all have a more significant impact on how the market moves.
The cryptocurrency market had dropped by about 4% in the hours before the FOMC meeting. Bitcoin and Ethereum had both dropped over 2% in the last 24 hours. Major altcoins like Ripple, Dogecoin, Toncoin, and Solana all went down in value.
Some people in the market think that lower interest rates could cause prices to go up, especially in the fourth quarter, but others are still being careful. Jamie Dimon, CEO of JPMorgan, said that world events like political tensions in Europe and the Middle East are more likely to have more of an impact on the markets than what the Fed did.
