Fed’s Daly Signals Likely Fall Rate Cut, Crypto Traders Eye Liquidity Boost
San Francisco Fed President Mary Daly told CNBC on June 20 that a Fed interest rate cut this fall is “likely” if the U.S. labor market remains strong and the economic effects of tariffs become clearer. Daly stressed the Fed’s dual mandate of maximizing employment and controlling inflation, noting policymakers will await more data on job growth, wage trends, and import costs before adjusting rates. Earlier, U.S. Commerce Secretary Howard Lutnick and Rep. Thomas Massie criticized current Fed policy for keeping rates at 4.25%–4.5% despite low inflation, while analysts warned heavy Treasury borrowing and booming factory output could justify rate cuts. Evercore’s Krishna Guha added that a potential “shadow Fed chair” under a future administration could influence policy ahead of Powell’s term end. For crypto markets, a lower Fed rate could spur liquidity inflows and boost demand for risk assets like Bitcoin. However, uncertainty over labor-market resilience, tariff impacts on inflation, and global economic risks means traders should monitor key indicators—jobs reports, CPI, PCE—and Fed communications closely. A data-dependent Fed suggests cautious positioning and diversified risk management for crypto portfolios in the run-up to fall.
Bullish
The prospect of a Fed rate cut this fall is likely to increase liquidity and lower borrowing costs, driving capital into risk assets such as Bitcoin. In the short term, expectations of lower rates tend to boost crypto prices as traders position for higher returns. Over the long term, sustained accommodative policy could support continued inflows into the crypto market, enhancing market stability and investor confidence.