With weak job data, growing political pressure, and Fed hinting policy shifts, traders are now betting big on rate cuts in September. Markets are already rebounding and this could be the beginning of a major Q4 recovery.
Is the Fed finally ready to pivot? Here’s what to expect.
September Rate Cut Odds Near 90%
Fed rate cut chances in the September meet had recently climbed to 94% and currently stand at 88%, as per CME FedWatch Tool.
Meanwhile, the odds of three Fed cuts in 2025 have surged to 50%, up from just 20% a week ago. The rapid shift signals a major policy pivot, which is bullish for markets, as more rate cuts mean more liquidity and support for risk assets.
Markets are also expecting three cuts by the year-end. Besides, Goldman Sachs also recently upgraded its 2025 outlook, projecting three rate cuts of 25 bps each, likely in September, October, and December.
Rate Cut Strategy by Mary Daly
San Francisco Fed President Mary Daly also notes that two rate cuts this year still look appropriate, but she is open to more if the job market weakens further. While September rate cut is not guaranteed, Daly believes every upcoming Fed meeting is a chance to act and emphasized the need to stay flexible as new economic data from inflation and labour reports is expected.
Why Is A Rate Cut Crucial In September?
Mary Daly’s comments come as President Trump keeps pushing for immediate rate cuts.
A September rate cut could be key to prevent further economic slowdown. It could also provide timely support, helping ease tightening without waiting too long. He believes that high interest rates are hurting the U.S. economy, slowing job growth, and weighing down markets.
After disappointing job numbers, Trump fired Labor Statistics Chief Erika McEntarfer and increased pressure on Fed Chair Jerome Powell, hinting at major changes ahead. Trump has also announced plans to nominate a new Fed Governor who supports rate cuts.
Markets See A Rebound
Wall Street bounced back Monday after last week’s sharp sell-off, over rising hopes of rate cuts. Crypto markets also saw a rebound as traders reacted to weaker U.S. job data and rising hopes for rate cuts.
Crypto Eyes Q4 Recovery
Analyst Alex Krüger believes that the recent crypto drop is a smaller repeat of last August’s crash. However, he stays bullish as he expects rate cuts, better crypto regulations, and more adoption to drive prices higher in Q4.
He also predicts that Bitcoin could hit $200K-$250K by mid-2026, especially if the Fed turns more dovish and the economy stays strong.
Other analysts are also comparing this to 2024 when a Fed pivot helped Bitcoin double by year-end. If history repeats, September and October could be strong months for crypto.
Bitcoin recovered to $114,345 on Monday, after dipping below $112,000 over the weekend. Ethereum surged 2.6%, while altcoins like Cardano and XRP rose up to 8%. Bitcoin is currently trading at $114,911.
With rate cut bets rising and crypto bouncing back, all eyes are now on the Fed’s next move.
