Key Forecasts and Market Implications
Standard Chartered Bank anticipates a 25 basis point rate cut by the Federal Reserve at their upcoming meeting. This forecast is based on a slowdown in the U.S. job market and broader global economic conditions. The bank's Wealth Management/Research team believes this initial cut will be followed by an additional 50 basis points by year-end, aligning with recent dovish remarks from Federal Reserve officials.
"We expect the Fed to cut by 25bps next week and 50bps more by year-end as the US job market slows." — Standard Chartered Bank Official Research Team
Potential Impact on Risk Assets
The anticipated policy shift by the Federal Reserve could significantly influence cryptocurrency markets. If rate cuts occur, risk assets such as stocks and cryptocurrencies may experience increased investor interest. Historically, lower interest rates have supported rallies in these assets by easing financial conditions and improving liquidity.
Standard Chartered's forecasts suggest a weaker U.S. Dollar, which could drive increased investment in emerging markets and technology sectors. This economic environment has historically correlated with sectors like cryptocurrency, including Bitcoin (BTC) and Ethereum (ETH), experiencing growth.
While Standard Chartered's forecasts do not specifically mention cryptocurrencies, implications can be drawn for BTC and ETH. Lower real yields and improved liquidity resulting from rate cuts have previously supported these digital assets. Historical data and market trends suggest that rate reductions by the Federal Reserve often lead to increased liquidity and risk appetite, which could positively impact cryptocurrencies, as they are generally considered high-risk, high-reward investments.