Standard Chartered has significantly revised its forecast for the upcoming Federal Reserve meeting, now expecting a 50 basis point interest rate cut in September—double its previous prediction of 25bps. This shift follows weaker-than-expected August labor data, with nonfarm payrolls adding just 22,000 jobs compared to the forecasted 75,000, and unemployment rising to 4.3%, breaking out of its 15-month range.
According to the bank's analysts, the labor market has gone "from solid to soft in less than six weeks," opening the door for more aggressive monetary easing. The current policy rate in the US stands at 4.25-4.50%, and markets are now pricing in a 90% probability of a 25bps cut and a 10% chance of a 50bps reduction. Bank of America also adjusted its outlook, projecting two quarter-point cuts in September and December.
For cryptocurrency markets, the prospect of looser monetary policy has ignited bullish sentiment. Lower interest rates typically reduce borrowing costs and steepen the yield curve, creating favorable conditions for risk assets like Bitcoin. This optimism is reflected in derivatives markets, where open interest in Bitcoin options has increased, with high demand for December 2025 call options indicating trader confidence in further gains.
Fed Chair Jerome Powell's upcoming September 17 address is highly anticipated for confirmation of the central bank's direction. However, Standard Chartered suggested the September move could be a one-off, noting that "sticky inflation and fiscal easing" may limit additional cuts this year. The rate cut debate occurs amid broader concerns over Fed independence, following Department of Justice subpoenas linked to mortgage fraud claims against Fed Governor Lisa Cook.