A wave of interest rate cuts from global central banks is surging, with the European Central Bank cutting rates seven times in a row and the Bank of England also lowering rates several times, yet the Federal Reserve has remained inactive, seemingly becoming an 'island' in global monetary policy. Federal Reserve Chairman Powell repeated the word 'wait' a record 22 times during a press conference, sending a clear signal: the Federal Reserve will not cut rates for the time being, no matter how urgent Trump is or how much the market pushes, Powell still wants to see clear data before taking action.
The core reason for the Federal Reserve not keeping pace with the global rhythm this time is actually very simple: the economic environment in the United States is fundamentally different from that of countries like Europe. Trump's recent series of chaotic tariff policies may not only push up domestic inflation in the short term but also make the Federal Reserve worry that cutting rates too early will recreate the 'inflation runaway' situation seen in 2021. Therefore, Powell is more inclined to patiently wait until he is sure that inflation has indeed declined before making decisions.
However, the Federal Reserve's caution may come at a cost: if it waits until the labor market shows a significant slowdown, such as non-farm employment falling below 100,000 and the unemployment rate approaching 4.5%, it may be too late to cut rates, and the economy could already be in a substantial recession. Therefore, in the coming months, the Federal Reserve will closely monitor employment and inflation data to decide on the timing of its actions.
Currently, the mainstream market predictions are quite divided: Goldman Sachs expects the Federal Reserve to start cutting rates as early as July, with three consecutive cuts this year; while JPMorgan is more cautious, suggesting it may be necessary to wait until September. Based on the current data performance, my judgment is that the probability of a rate cut in June is around 20%-30%. If the May CPI or core PCE is significantly lower than expected, or if the non-farm employment data released in early June shows a substantial decline, the probability of a rate cut in June will rise quickly; conversely, the Federal Reserve will continue to delay until July or even September.
So, what is the relationship between the Federal Reserve's interest rate cuts and the Bitcoin market? Historically, a Federal Reserve rate cut signifies a significant increase in market liquidity, and risk assets like Bitcoin typically benefit first, experiencing a large influx of capital and initiating a clear upward trend. Therefore, although the Bitcoin price may fluctuate at high levels in the short term, once the signal for a rate cut is clear, market funds will quickly flow in, making a Bitcoin bull market highly likely.
For investors, the most important thing right now is not to chase daily short-term fluctuations, but to continuously pay attention to the upcoming key data releases, especially non-farm employment reports, CPI, and core PCE inflation indicators. Changes in this data will reflect the direction of Federal Reserve policy in advance, thus providing key insights for investment decisions.
In short, the Federal Reserve's 'waiting game' will not continue indefinitely; in the coming months, any subtle changes in data could lead to a rapid shift in the Federal Reserve's stance. The Bitcoin market will also respond quickly to changes in the Federal Reserve's policy expectations: once the rate cut cycle begins, Bitcoin may enter a new bull market, and investors who miss this critical moment may find themselves forced to chase prices at high levels.