Bitcoin News Today: Rate Cut Aims to Stem Labor Market Weakness as Inflation Recedes

The Federal Reserve is poised to deliver a 25-basis-point rate cut at its October 2025 meeting, with the probability of the move now at 98.3%, according to a TradingView report. The decision, widely anticipated by economists and traders, reflects a shifting policy focus from inflation control to stabilizing a labor market showing signs of softening. Despite a government shutdown delaying most official economic data releases, private-sector indicators and the recent release of a truncated consumer price index (CPI) have provided enough clarity for the Federal Open Market Committee (FOMC) to act, as a Bond Buyer article reports.

The rate cut, while expected, is framed as a precautionary measure to avert further deterioration in employment conditions. James Ragan, director of wealth management research at D.A. Davidson, noted that the labor market's "weakness" and the lack of robust inflationary data have created a "safer" environment for easing policy, according to Bond Buyer. The move aligns with the FOMC's latest Summary of Economic Projections, which suggested two additional rate cuts this year and a gradual path of easing in 2026, as noted by Bond Buyer.

Meanwhile, the cryptocurrency market has already priced in the Fed's move, with Bitcoin open interest surging to $37.63 billion ahead of the decision, according to an Unchained Crypto report. The rally in Bitcoin, which climbed to $116,000 from $107,600 in a week, has been bolstered by expectations of looser monetary policy and a 92.6% probability assigned to the rate cut on prediction markets. French lawmaker Éric Ciotti's proposal for a national Bitcoin Strategic Reserve—targeting 2% of the total supply—has further fueled optimism, with $931 million in inflows reported for Bitcoin investment products last week, according to TradingView.

The rate cut is also expected to influence broader economic dynamics. The U.S. dollar, hovering near a one-week low against major currencies, faces additional pressure as traders price in dovish outcomes in a Reuters report. Australia's dollar, for instance, rose 0.3% after hotter-than-expected CPI data raised doubts about a rate cut from the Reserve Bank of Australia, Reuters reports. In the housing market, the Fed's easing could provide modest relief to mortgage rates, though lenders may remain cautious given lingering inflation concerns, according to a CBS News report.

Uncertainty persists around the timeline for ending quantitative tightening (QT). While some analysts, including J.P. Morgan's Jay Barry, expect the FOMC to announce the cessation of balance sheet reductions at the October meeting, others, such as Wells Fargo's Sarah House, maintain a December 2025 timeline as the base case, according to Bond Buyer. The lack of official data complicates the Fed's ability to make forward-looking assessments, with central bankers likely to remain "data-dependent" despite the shutdown, Bond Buyer adds.

On the geopolitical front, U.S.-China trade tensions may see a temporary reprieve. The Trump administration is reportedly considering a 10% reduction in fentanyl tariffs on Chinese goods, a move that could spur China to resume soybean imports and ease broader trade frictions, according to an Asiae report. Such developments, if confirmed, could further support risk-on sentiment and reinforce the case for continued Fed easing.

The post-meeting statement and press conference by Fed Chair Jerome Powell will remain focal points for markets. Analysts anticipate a reiteration of the "balance of risks tilted to employment" narrative, with Powell likely downplaying the lack of government data and highlighting private-sector indicators, as Bond Buyer reports. The outcome will be critical in shaping expectations for the December meeting and beyond, as traders weigh the path of QT and the pace of rate cuts in 2026, according to Bond Buyer.