The FED left interest rates unchanged at 5.25-5.50 percent in July, as it has for over a year. Following the July decision, markets are now awaiting the September interest rate decision.
When Will the September FED Interest Rate Decision Be Announced?
While the most critical FED interest rate decision of 2024 is expected to have an impact on gold, dollar, oil, Bitcoin (BTC) and cryptocurrencies, the FED will announce its September decision on September 18, that is, today at 21:00 Turkish time.
After the decision, FED Chairman Jerome Powell will make a statement, and Powell's statements are also of great importance.
In Which Direction Are Expectations Focused?
While it is almost certain that the US Federal Reserve will cut interest rates after a four-year hiatus at its meeting this week, it remains unclear how much the Fed, which last cut interest rates during the Covid-19 period, will reduce interest rates.
While confidence that inflation in the US will fall to the 2% target has strengthened after the latest data was released, the market expectation of a 50 basis point interest rate cut continues to gain strength.
At this point, while a 50 basis point discount is priced at 63% and a 25 basis point discount is priced at 37%, economists have different estimates on this subject.
According to the FED survey results announced by CNBC, participants think the FED will make a soft landing and cut rates by 25 basis points.
Financial giants such as JPMorgan and Goldman Sachs also predict that the Fed will make a 25 basis point cut.
“The key issue at this meeting will be the balance of risks. If you are more concerned about growth and employment, you may be tempted to cut rates more broadly. But a smaller 25 basis point cut is preferable on the grounds that the economy is fundamentally in good shape and a rapid rate cut could re-ignite inflation,” economist William English said.
Speaking to CNBC, JPMorgan CEO Jamie Dimon said that the Fed's decision to cut interest rates by 25 or 50 basis points would not be earth-shattering.
“They need to do that. It's not a big deal for the Fed to raise and lower interest rates because there's a real economy underlying it,” Dimon said.
Former Dallas Fed President Robert Kaplan said interest rates are currently one percentage point above where they should be, adding, “If I were starting with a clean slate, I would say rates should be around 4.5 percent. But other Fed officials think we need to be more cautious.”
Joe McCann, founder and CEO of crypto hedge fund Asymmetric, said the Fed should cut interest rates by 50 basis points, adding that a 50 basis point cut would benefit risk assets and crypto markets. “Conversely, a 25 basis point cut could negatively impact both stocks and Bitcoin and crypto markets, especially as stocks are at all-time highs in anticipation of a larger cut,” McCan said.
Finally, three Democratic senators, including Elizabeth Warren, called on the Fed to cut interest rates by 75 basis points to protect the US economy. In their letter to Powell, the Democratic senators said, “If the Fed is too cautious in reducing interest rates, it will unnecessarily put our economy at risk of falling into a recession.”
FED Chairman Had Signaled!
Jerome Powell stated at the Jackson Hole Symposium in August that it was time to lower policy interest rates, which have been kept at historically high levels for a long time.
*This is not investment advice.