Former Cleveland Federal Reserve Bank President Loretta Mester recently discussed the possibility of a rate cut at the November Federal Open Market Committee meeting. She stated that a 25 basis point cut seems quite straightforward at this time and explained the reasons.
A 25 basis point rate cut by the Fed is 'quite straightforward'.
Loretta Mester stated in an interview with CNBC that although inflation has not yet reached the Fed's 2% target, it has significantly decreased from its peak, making a 25 basis point rate cut seem quite straightforward at this time.
She referred to all the latest inflation data since the September FOMC meeting, claiming that this data has not changed the fundamental situation of declining inflation and the increasing confidence that inflation will continue to trend downwards.
The former Fed chair also pointed out that the unemployment rate is easing, and the employment data shows a healthy labor market. Therefore, she stated that as the U.S. economy normalizes, the Fed should attempt to implement an accommodative monetary policy.
Mester made the above remarks as the U.S. released employment data, showing that non-farm payrolls increased by 12,000 in October, lower than the expected 110,000. Meanwhile, the unemployment rate remained unchanged at 4.1%.
In response, the former Cleveland Fed president stated that the disappointing employment data might have been due to hurricanes hitting the U.S. last month. She also expressed satisfaction that the unemployment rate remained unchanged, as this indicates that the U.S. economy is not as weak as the non-farm payroll data suggests.
Like Mester, traders also seem to believe that the Fed's next step should be to cut interest rates by 25 basis points. FedWatch tools indicate a 99.8% chance of a 25 basis point cut at the November FOMC meeting.
The significance of the Fed's decision.
A 25 basis point cut by the Fed is significant as it could serve as a catalyst for Bitcoin prices to break through the current all-time high (ATH) of $73,700. After a 50 basis point cut at the September FOMC meeting, Bitcoin and the broader cryptocurrency market reacted positively in September.
It is worth mentioning that the Fed will announce its rate cut decision two days after the U.S. presidential election on November 5. Thus, the election results combined with a rate cut are the perfect secret for a rebound in BTC and the cryptocurrency market.
Arthur Hayes, co-founder of BitMEX and other cryptocurrency stakeholders, suggested that the crypto community should pay more attention to the Fed's decisions rather than the U.S. elections. Arthur Hayes claimed that the outcome of the U.S. elections would not affect BTC. Instead, he stated that money printing and increased U.S. debt issuance could ultimately boost Bitcoin.
However, according to market analysis from CoinGape, if Kamala Harris wins the election, Bitcoin prices could face a correction of 8% to 13%. Meanwhile, if Donald Trump wins, BTC could easily surpass its all-time high and rise to $80,000.
