Bitcoin News Today: Investors Push Fed Toward Historic Rate Cut Amid Jobs Downturn

Federal Reserve Rate Cut Expectations Rise to 99%

The Federal Reserve is now nearly certain to cut its benchmark interest rate at its next meeting in September, following a weaker-than-expected jobs report. According to the latest data, the U.S. economy added just 22,000 jobs in August, far below the projected 75,000. The unemployment rate rose to 4.3%, signaling a slowing labor market. These figures have prompted financial market participants to price in a 99% probability of a rate cut during the September 16-17 meeting, as reported by the CME Group’s FedWatch tool. Investors have also begun pricing in a 14% chance of a larger-than-usual 50-basis-point reduction, bringing the federal funds rate to a range of 3.75% to 4%[1]. This shift marks a significant departure from previous expectations, where a 25-basis-point cut was considered the most likely scenario[2].

The decision to cut rates comes amid the Fed’s ongoing struggle to balance its dual mandate of controlling inflation and supporting employment. While inflation remains above the Fed’s 2% target, the recent labor market slowdown has shifted the central bank’s focus toward preventing a potential rise in unemployment. In a speech at Jackson Hole, Wyoming, earlier this month, Federal Reserve Chair Jerome Powell indicated that the balance of risks was shifting and that the Fed might need to adjust its policy stance accordingly[1]. Analysts have since argued that the weak job growth justifies a policy pivot, with Jamie Cox of Harris Financial Group stating that the data provides the Fed with ample justification to lower rates[1].

White House officials have also weighed in, urging the Fed to act more swiftly. Labor Secretary Lori Chavez-DeRemer criticized Powell for his perceived delay in cutting rates and emphasized the importance of lower borrowing costs for businesses and workers. President Donald Trump echoed this sentiment in a social media post, accusing Powell of being “too late” in responding to the economic slowdown[2]. These pressures, coupled with the economic data, appear to have forced the Fed’s hand. While the central bank has previously prioritized fighting inflation—particularly in light of President Trump’s proposed tariffs—the recent jobs report has changed the equation. The Fed now faces the challenge of navigating a fragile labor market without reigniting inflationary pressures[1].

The expected rate cut has already had an impact on financial markets. The odds of a 50-basis-point reduction have risen significantly in recent days, signaling investor confidence in a more aggressive response from the Fed. Meanwhile, asset managers and analysts are closely watching how the central bank frames its policy outlook. Leslie Falconio of UBS Global Wealth Management noted that the key issue is whether the cut will be seen as a “dovish” or “hawkish” move, depending on how Powell describes the Fed’s future plans[2]. Greg Daco of EY emphasized that the broader question lies in the Fed’s strategy for the remainder of 2025 and into 2026[2]. This uncertainty has kept market participants engaged, as they anticipate further policy adjustments based on incoming economic data.

The implications of a rate cut extend beyond the labor market. For example, digital asset markets have already priced in a 95% probability of a September rate cut, with Bitcoin and Ethereum showing signs of consolidation ahead of the meeting[3]. Institutional investors and analysts believe that a dovish Fed policy could boost risk-on assets, including cryptocurrencies. Furthermore, recent inflows into Ethereum-based investment products have outpaced those of Bitcoin, suggesting shifting investor sentiment[4]. As the Fed moves closer to its decision, market participants across asset classes remain on high alert, anticipating further volatility and strategic adjustments in the coming weeks[4].

Source:

[1] 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)

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

[3] Crypto update: BTC nears breakout, ETH tightens supply; ... (https://www.business-standard.com/markets/cryptocurrency/crypto-recap-btc-nears-breakout-eth-tightens-supply-defi-bridges-tradfi-125090400292_1.html)

[4] Digital asset fund flows | September 1st 2025 (https://coinshares.com/insights/research-data/fund-flows-01-09-25/)