Bitcoin News Today: Federal Reserve's September Rate Cut Locks In as Crypto Markets Rally in Response

The probability of a Federal Reserve rate cut in September has surged to nearly 100%, driven by a weak jobs report that highlights a slowing labor market and intensifying political pressure on the central bank to act. The U.S. economy added only 22,000 jobs in August, significantly below the 75,000 forecasted, while the unemployment rate edged up to 4.3% [1]. Revisions to previous months' data also showed negative job growth in June and below-trend performance in July, marking a three-month decline in hiring momentum [1].

Federal Reserve Chair Jerome Powell had already signaled openness to rate cuts during his speech at the Jackson Hole symposium, noting a shifting balance of risks in the economy [1]. The latest data has removed any remaining uncertainty among investors, who now expect a cut at the September 16–17 meeting. According to the CME Group’s FedWatch tool, the likelihood of a 25 basis-point reduction is near certainty, with a 14% chance of a 50 basis-point cut priced in by the market [2]. Analysts such as Leslie Falconio of UBS and Jamie Cox of Harris Financial Group have echoed this sentiment, with Falconio highlighting the debate over whether the cut will be “dovish” or “hawkish” in tone [1].

The broader economic implications of the rate cut are already being felt in financial markets. Cryptocurrencies, in particular, have shown a marked response. Bitcoin, Ethereum, and XRP rebounded from 24-hour lows following the release of the jobs data, as traders increasingly priced in multiple rate cuts this year [4]. Lower interest rates typically reduce borrowing costs, increase liquidity, and shift investor appetite toward higher-risk assets like cryptocurrencies [3]. This dynamic is expected to support the growth of the crypto ecosystem, particularly as borrowing becomes cheaper and speculative activity rises [3].

The Fed’s decision to cut rates reflects its dual mandate of controlling inflation and maintaining strong employment. While inflation has trended closer to the 2% target, concerns over a weakening labor market have taken precedence. The administration has publicly pressured Powell to act more decisively, with President Donald Trump and Labor Secretary Lori Chavez-DeRemer criticizing the Fed for delaying rate reductions [1]. This political backdrop adds to the urgency of the Fed’s response, as policymakers seek to stabilize the job market before year-end [1].

Looking ahead, the market is now pricing in a total of 75 basis points in rate cuts by the end of the year, with a 25 basis-point reduction expected in December [4]. The Fed’s next major decision point will be the September meeting, where the tone of Powell’s statement will provide clues about the central bank’s future course. Analysts are closely watching whether the rate cut will be accompanied by a more aggressive pivot or a measured approach, which could influence both traditional and crypto markets [1].

The coming weeks will be pivotal as the Fed navigates the delicate balance between inflation and employment. A 100% probability of a September rate cut signals a clear shift in monetary policy, with broader economic and financial market implications. As the Fed moves forward, all eyes will be on how quickly it adjusts its stance in response to evolving labor and inflation data.

Source:

[1] Jobs slowdown seals Fed rate cut as White House criticizes Powell for not acting sooner (https://finance.yahoo.com/news/jobs-slowdown-seals-fed-rate-cut-as-white-house-criticizes-powell-for-not-acting-sooner-150805909.html)

[2] Fed Rate Cut Now Appears Certain After Weak Jobs Report (https://www.investopedia.com/job-report-seals-federal-reserve-interest-rate-cut-in-september-11804268)

[3] Could an Interest Rate Cut from the Fed Help or Hurt Bitcoin? (https://finance.yahoo.com/news/could-interest-rate-cut-fed-103300007.html)

[4] Bitcoin, Ethereum, XRP Rebound as Markets Pricing In 3 Fed Rate Cuts (https://coingape.com/bitcoin-ethereum-xrp-rebound-as-markets-pricing-in-3-fed-rate-cuts/)