Fed Eyes September Rate Cuts, Forecasts Two Cuts This Year
Guotai Haitong Securities forecasts that the US Federal Reserve will begin rate cuts in September, projecting up to two rate cuts this year. The report cites Fed Chair Jerome Powell’s remarks at the 2025 Jackson Hole Symposium, which signaled a dovish shift by emphasizing greater downside risks to employment than upside inflation pressures. In addition, revisions to the US monetary policy framework suggest increased flexibility for preventive easing. Despite the anticipated rate cuts, Guotai Haitong expects the Fed to maintain a cautious pace, limiting cuts to avoid reigniting inflation. Traders should watch key inflation metrics and employment data for confirmation of this anticipated dovish monetary policy shift and adjust their positions accordingly.
Bullish
Rate cuts lower interest rates and can weaken the US dollar, often leading to capital flows into risk assets like cryptocurrencies. In past easing cycles, crypto markets rallied significantly; for example, following the Fed’s 2019–2020 rate cuts, Bitcoin surged over 300%. The anticipation of September rate cuts and two total cuts this year could ignite short-term bullish momentum in crypto trading as investors increase leverage and risk exposure. Over the long term, Fed’s cautious approach—prioritizing inflation control—suggests moderate support for crypto prices, with sustained gains dependent on ongoing dovish monetary policy and positive economic indicators.