CITIC Predicts Surge in September Fed Rate-Cut Probability
CITIC Securities’ report highlights that Fed Chair Jerome Powell’s dovish remarks at the Jackson Hole symposium increased the odds of a September Fed rate cut, sending the USD index sharply lower. Powell underscored the dual challenges of persistent inflation and a cooling labor market, with the latter posing downside economic risks. The report now forecasts a significantly higher probability of a Fed rate cut in September, which could weaken the dollar and bolster risk assets, including cryptocurrencies. Crypto traders should monitor USD index movements and rate-cut expectations as potential catalysts for market shifts.
Bullish
A higher probability of a September Fed rate cut typically weakens the US dollar and lowers real interest rates, reducing the opportunity cost of holding non-yielding assets such as cryptocurrencies. Historically, dovish Fed pivots—like the late-2019 rate cuts—coincided with BTC and altcoin rallies as dollar selling fueled risk-asset inflows. In the short term, markets may see volatility around official Fed communications, but the longer-term outlook remains supportive for crypto if rate-cut expectations persist.