The probability of the Federal Reserve (Fed) lowering interest rates in the September and October meetings is very high, with over 80% likelihood of a 25 basis point cut in September.
CME Fed Watch forecasts that the Fed may gradually lower interest rates in Q4, as indicated by the majority prediction of rate cuts in the most recent meetings in September and October this year.
MAIN CONTENT
The likelihood of the Fed keeping interest rates unchanged in September is only 15.4%.
The probability of the Fed reducing the interest rate by 25 basis points in September is 84.6%.
The Fed may reduce interest rates by a total of 50 basis points in October with a probability of 51.5%.
How likely is the Fed to keep or lower interest rates in September?
Data from CME Fed Watch on August 18 shows that the probability of the Fed keeping interest rates unchanged in the September meeting is only 15.4%, while the chance of a 25 basis point cut reaches 84.6%. This reflects strong market expectations that the Fed will lower interest rates in this meeting.
The inclination towards lowering interest rates reflects investors' cautious sentiment before the potential signs of the U.S. economy needing supportive policies. In-depth analyses also suggest that the Fed may prioritize economic stimulus by reducing capital cost pressures.
What are the forecasts for the Fed's likelihood of lowering interest rates in October?
According to CME Fed Watch, the probability of the Fed keeping interest rates unchanged in the October meeting is only 6%, while the likelihood of cutting rates by 25 basis points is 42.4% and by 50 basis points is 51.5%. This indicates increasing expectations for a loosening policy towards the end of Q3 and the beginning of Q4.
The trend of lowering interest rates at this stage is expected to help boost economic growth, reduce borrowing costs for businesses and individuals. This is also a signal that the Fed wants to maintain macroeconomic stability, supporting the economy to cope with global fluctuations.
A flexible monetary policy is a key factor in ensuring "Stability and Sustainable Development" in the context of a globally volatile economy.
— Market economic analyst, 2024
How does the Fed's interest rate change affect the cryptocurrency market?
When the Fed lowers interest rates, it generally creates a more favorable environment for risky assets like cryptocurrency as borrowing costs decrease, and cash flows tend to move more strongly into this market. However, volatility remains high due to psychological factors and potential sudden policy adjustments.
Many investors closely monitor interest rate information to adjust their portfolios, emphasizing the Fed's role in regulating global capital flows, which directly impacts the volatility of major coins like Bitcoin and Ethereum.
Frequently Asked Questions
What is Fed Watch?
This is a tool that tracks the probability of Fed interest rate changes based on futures contracts, helping investors forecast monetary policy.
Why might the Fed lower interest rates by the end of 2024?
The Fed may lower interest rates to support economic growth as economic indicators show signs of slowing down or risks from the global market increase.
How does lowering interest rates affect cryptocurrency?
Lowering interest rates often helps improve liquidity, attracting capital flows into cryptocurrency and other risky assets.
Are there any policies other than lowering interest rates?
The Fed also uses tools such as buying bonds and credit measures to stabilize the economy.
Is the interest rate forecast absolutely accurate?
No, the forecasts are based only on current data and may change depending on actual economic developments.
Source: https://tintucbitcoin.com/fed-co-846-kha-nang-ha-lai-suat-thang-9/
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