US-Fed Interest Rate Cuts to Be Decided : What Experts Say?

With just some hours to go, for the US Fed to announce its latest interest rate, experts have weighed in their two cents with what could be expected out of the meeting.

The rate-setting panel, led by Fed Chair Jerome Powell, is widely expected to decrease the benchmark interest rate for the first time in four years as he indicated confidence in cutting rates, citing inflation levels close to the central bank’s 2 % target.

The market believes that a 25 basis point rate cut would align better with the Fed’s practice of starting previous easing cycles outside of a brewing crisis. KPMG chief economist Diane Swonk has said that while a 50 bp rate cut “will undoubtedly be discussed,” “Powell is unlikely to get enough votes.”

Echoing a similar notion, the founder of Bridgewater Associates, Ray Dalio said that a 25 basis point rate cut by the Federal Reserve would be correct. Dalio also added that if mortgages are taken into account, a 50 basis point rate cut would be needed.

On the contrary to this, Oksana Aronov, head of alternative fixed income market strategy at JPMorgan Asset Management sees the speculations as ‘exaggerating’. In an interview with CNBC, he said that interest rates are not as restrictive as the Fed expected. The market has become used to a low interest rate environment. He added, “This (the market’s call for rate cuts) is the impact that 15 years of extraordinary unconventional monetary policy will have on the market.” He further opined that, U.S. economy is still continuing to grow steadily and the Fed doesn’t need to cut rates.

Fed interest rate implications on Crypto: BTC to reach $100K?

Anthony Scaramucci, founder of Sky Bridge, noted that the Fed Reserve may cut interest rates by 50 basis points “which is part of a cumulative rate cut of at least 150 basis points in the next 18 months”. Calling the rates good for assets, Scaramucci added that the rates and clearer regulation of cryptos can collectively lead Bitcoin to a record high of $100,000 by the end of the year.

Scaramucci  has predicted that regulations on Bitcoin and stablecoins can be passed in the early stages of the next U.S. Congress.

As for the general predictions on interest, FedWatch Tool, says that the probability of Fed cutting interest rates by 50 basis point in Sept is 63% and the probability of the Fed cutting interest rates by 25 bp in September was 37%.

The current FOMC meeting will mark the sixth monetary policy meeting of 2024.

Also Read: BlackRock Slashes Fed Rate Cut Odds: What’s Next for Crypto?