#CryptoNewss

Macro context: Interest rate cuts and their double-edged effect

All eyes are on the Federal Reserve, as traders brace for the pivotal interest rate decision scheduled for September 17. The market is pricing an 84% chance that the Fed will lower rates from 4.5% to 4.25%, with further cuts to 4.0% or even 3.75% projected by year end. This trajectory implies two to three additional rate cuts between now and December.

What makes this situation especially complex is that rate cuts can come from both strength and weakness:

• A “good news” rate cut would be driven by falling inflation and low unemployment, signaling confidence in economic stability. This environment is typically bullish for risk assets, such as crypto and stocks.

• A “bad news” rate cut, on the other hand, reflects labor market deterioration, falling job creation, rising unemployment and broader economic instability. While rates still decline, the market may react cautiously or even bearishly if fears of recession dominate sentiment.

So far, the current macro backdrop presents a mixed bag. The latest jobs report (August 1) came in weaker than expected, showing declining job growth. This adds uncertainty: If the Fed cuts the interest rate due to labor weakness, will traders cheer the extra liquidity — or panic about a slowing economy?