Expert consensus foresees 25bps cut and short-term volatility

Ahead of the Fed meeting, markets are assessing expected rate cuts and how asset prices may react in the coming months.

According to Bloomberg’s survey of 114 economists, 104 experts predict the Fed will cut funds rates by 25 basis points for the first time in four years, while nine analysts predicted a 50 basis point cut.

Market participants on Wednesday predicted a 66% chance of a 50 basis point decision at the Federal Open Market Committee meeting on Sept. 18, while the probability of a 25 basis point cut was 33%, according to QCP Capital, citing Fed Funds Futures pricing.

The same CME FedWatch data had indicated a 61% probability as of Sept. 16. Last week, trader expectations had estimated the probability of a 50 basis point cut at 14%.

The impact of interest rate cuts is currently unclear, QCP Capital analysts said. The exact monetary policy decision, Dot plot projections and Fed Chair Jerome Powell’s post-FOMC remarks could also affect price action, QCP said in a note to investors.

However, we are certain that volatility will be high in the days following the meeting as investors readjust their positions over the next few weeks. The regime change could also signal the start of strong macro trends.

QCP on possible price fluctuations after FOMC

The total crypto market cap was down about 4% in the hours leading up to the FOMC meeting. Bitcoin (BTC) and Ethereum (ETH) are down more than 2% each in the last 24 hours. Major altcoins like Solana (SOL), Ripple (XRP), Dogecoin (DOGE), and Toncoin (TON).

Advocates argue that additional liquidity will accelerate price appreciation in a low-interest economy. Specifically, as we enter the fourth quarter, market participants believe that historical patterns will play out and prices will rise.

Speaking about the FOMC meeting and the Fed’s transformation, JPMorgan CEO Jamie Dimon said the change in monetary policy was a “small thing.” Dimon noted that major global events like geopolitical tensions in Europe and the Middle East are likely larger factors to consider.

🚨🇺🇸JPMORGAN CEO SAYS FED RATE CUTS WON’T BE “WORLD-SHAKING”

Jamie Dimon said that the possible impact of the US Federal Reserve (Fed) cutting interest rates by 0.25% or 0.5% is insignificant.

He stressed that these changes were minor compared to broader economic issues.

Dimon pointed to geopolitical issues… picture.twitter.com/ytbzPyCE3x

— Mario Nawfal (@MarioNawfal) September 18, 2024