Fed Cut Certain; CPI Data May Trigger 50bp Rate Cut
Next week’s macro outlook is dominated by the Federal Reserve’s imminent rate cut and pivotal inflation readings. With a 25 bp Fed rate cut in September virtually assured, traders are now eyeing Thursday’s US August CPI data as a potential catalyst for a surprise 50 bp reduction. Key events include:
• Mon 23:00 EST – NY Fed 1-year inflation expectations (Aug)
• Tue 22:00 EST – US 2025 nonfarm benchmark revisions
• Wed 09:30 CST – China August CPI y/y
• Wed 20:30 EST – US August PPI
• Thu 20:15 CET – ECB rate decision
• Thu 20:30 EST – US August CPI & weekly jobless claims
• Thu 20:45 CET – ECB press conference
• Fri 22:00 EST – US 1-year inflation expectations & Michigan consumer sentiment
Lower US inflation would strengthen expectations of an accelerated Fed rate cut path, boosting liquidity for risk assets, including cryptocurrencies. Traders should prepare for heightened volatility around these data releases and policy meetings.
Bullish
The prospect of an imminent Fed rate cut—potentially even 50 bp if CPI surprises to the downside—typically fuels liquidity-driven rallies in risk assets, including cryptocurrencies. Historically, lower inflation readings have accelerated Fed easing cycles and supported price gains in Bitcoin and altcoins. In the short term, markets may experience spikes in volatility around CPI and ECB announcements, creating trading opportunities. Over the longer term, a confirmed easing path will likely sustain bullish momentum, as lower yields and increased money supply bolster crypto valuations, echoing previous cycles in 2020 and early 2023.