Powell avoided discussions on monetary policy, focusing on bank regulation issues
Fed Chair Jerome Powell deliberately avoided all questions related to monetary policy at yesterday's bank regulation meeting, providing no hints about the central bank's future policy direction. According to the Fed's official release, Powell's opening remarks primarily discussed the U.S. banking capital structure, its components, and the importance of effective regulation.
Source: Federal Reserve Fed Chair Jerome Powell discussed the U.S. banking capital structure, its components, and the importance of effective regulation at yesterday's bank regulation meeting.
Powell stated at the meeting: 'One great benefit of this meeting is the opportunity to comprehensively consider all elements of the capital structure, rather than looking at each part in isolation. We need to ensure that all different components of the capital structure can work together effectively. Doing so will help maintain a safe, sound, and efficient banking system that benefits the people we serve.'
It is worth noting that Powell's remarks failed to meet the expectations of the cryptocurrency market. Given that the timing of the meeting coincided with escalating tensions between Powell and Trump, some had originally expected him to make statements regarding resignation or potential rate cuts. However, Powell remained silent about his future at the Fed and any potential rate cut plans, which may further impact the performance of the cryptocurrency market.
Trump pressures for a 1% rate cut, accusing Powell of political maneuvering
U.S. President Trump has once again launched an attack on Fed Chair Powell, accusing him of possibly delaying rate cuts for political reasons. At a press conference with the Philippine president, Trump stated that interest rates should be cut to 1% because the national economy is 'on fire' and needs a rate cut now. He claimed that a 3 percentage point rate cut would save the U.S. economy $1 trillion each year.
Trump further stated that the U.S. economy is strong, but Powell and the Federal Open Market Committee (FOMC) continue to maintain high rates instead of pushing for cuts. While he indicated no plans to fire Powell, he noted that Powell's term will end in May 2026, saying, 'Anyway, he will be leaving soon.'
Currently, a purported resignation letter from Powell is circulating online, but upon closer inspection, the document was found to be forged. The letter has issues with formatting, seal placement, and language style, and the Fed has not released any official confirmation. It has been confirmed as a rumor, and the U.S. Senator who spread the rumor, Mike Lee, has since deleted the article.
Source: X/@jordainc A purported resignation letter from Powell is circulating online.
Nevertheless, the prediction market Polymarket still assigns a 19% chance of Powell being dismissed. Additionally, Trump's ally Congresswoman Anna Paulina Luna has referred Powell to the Department of Justice for perjury regarding the Fed's headquarters renovation costs.
Source: Polymarket The prediction market Polymarket still assigns a 19% chance of Powell being dismissed.
The market anticipates a rate cut in September, with Goldman Sachs predicting three cuts this year.
Despite pressure from the White House to cut rates, the market and experts generally believe that the Fed is unlikely to adopt a dovish stance in the short term. Since last December, the FOMC has kept the federal funds rate target range at 4.25% to 4.50%, with the most recent June meeting maintaining rates unchanged due to concerns over inflation and tariffs.
According to CME FedWatch data, traders believe there is a 60% chance of a 25 basis point rate cut in September, but only a 5% chance of a rate cut by the end of July.
Source: CME FedWatch The probability of a 25 basis point rate cut in September is 60%.
Chief economist of a commercial bank, Bill Adams, stated: 'The Fed is expected to keep rates unchanged at this month's meeting; the slight drop in the unemployment rate in June is seen as evidence that they can wait to observe the impact of tariffs and tax cuts. However, if the inflation trend from June continues, the Fed may be able to cut rates later in 2025.'
Goldman Sachs predicts that after maintaining rates unchanged at the July 30 meeting, the remaining three FOMC meetings this year will see consecutive rate cuts, primarily due to a slowing labor market. The bank noted that private sector hiring is almost at a 'standstill', which could trigger a slowdown in the U.S. economy. Meanwhile, consumer spending has slowed for six consecutive months, a pattern typically associated with economic recessions.
The cryptocurrency market is watching for the timing of rate cuts, with history showing a bullish effect
Wall Street is increasingly optimistic about the possibility of the U.S. cutting interest rates by the end of 2025. U.S. inflation expectations have significantly dropped, with one-year consumer expectations falling to 4.4% in July, the lowest level since February, a drop of 2.2 percentage points in just two months, marking one of the largest two-month declines in history. Five-year inflation outlook also decreased by 0.8 percentage points last quarter, currently at 3.6%.
The cryptocurrency market is closely monitoring these developments. Bitcoin ($BTC) remains above $118,000, while Ethereum ($ETH) is hovering around $3,700. Historically, these two assets tend to rise after the Fed cuts rates, benefiting from increased liquidity and a heightened risk appetite among investors.
Historical data shows that rate cuts often trigger a strong cryptocurrency bull market. After the Fed's significant rate cuts during the COVID-19 pandemic in March 2020, Bitcoin soared from below $10,000 to over $60,000 within a year. If a new rate cut cycle begins in September, it could create similar conditions, with lower yields pushing investors towards risk assets.
Key dates include the Fed policy meeting on July 29-30, and the FOMC meeting on September 16-17, widely seen as the first potential window for a rate cut. Other important indicators include July CPI data in early August, the Jackson Hole meeting from August 22-24, and employment reports in August and September.
'Powell's latest speech: only talks about bank regulation, not interest rates! The conflict between the Fed and the White House is escalating' was first published on 'Crypto City'
