Is the Fed Fueling an AI Crypto Rally ? Powell’s Rate Decision Analyzed .

Market expectations for a September rate cut have significantly increased. Following Powell's Jackson Hole speech on August 22, where he adopted a more dovish tone, traders priced the probability of a September rate cut at around 85%–90%, up from 72% before his remarks .
· As of September 16, market indicators (e.g., the CME FedWatch Tool) suggest a near-100% probability of a 25-basis-point cut, with a small fraction (∼5%) even expecting a 50-basis-point cut .
Labor Market Slowdown: Recent employment data (e.g., July non-farm payrolls averaging only 35,000 new jobs per month over the past three months, down from 168,000 in 2024) indicate a cooling labor market. Powell noted that while the unemployment rate remains low (4.2% in July), the "unusual balance" due to slowed labor supply and demand increases downside risks .
· Inflation Dynamics: Although inflation (PCE at 2.6% year-on-year in July) remains above the Fed's 2% target, Powell suggested that tariff-related price increases might be "one-time level effects" rather than persistent inflation drivers. This allows the Fed to focus on supporting employment .
· Political Pressure: President Trump has repeatedly called for deeper rate cuts, recently urging Powell to implement "larger" cuts . His dismissal of Fed Governor Lisa Cook (now in litigation) and nomination of his economic advisor, Stephen Miran, to the Board have raised concerns about Fed independence .