Cryptographic assets, represented by Bitcoin, are indeed increasingly influenced by macroeconomic factors. The Fed's rate-cutting policy has a significant impact on the inflow of funds into crypto assets. On November 15, Fed Chairman Powell mentioned that given the strong performance of the U.S. economy, the Fed is not in a hurry to lower interest rates, but will watch carefully to ensure that inflation indicators remain within acceptable ranges. Powell emphasized that the path of the Fed's policy rate will be determined based on forthcoming data and changes in the economic outlook. He noted that the inflation rate is approaching the Fed's 2% target but has not yet reached it. The Fed will closely monitor core inflation indicators, which have been declining over the past two years, and these indicators are expected to continue fluctuating in the near term. Although the road to the Fed's 2% target may sometimes be bumpy, it is still believed that we are on the right track regarding inflation.
That evening, U.S. retail sales for October recorded a month-on-month increase of 0.4%, higher than the expected 0.3%, and the previous value was revised up from 0.4% to 0.8%. Due to the sustained willingness of American consumers to spend, retail sales steadily grew in October. After the data was released, spot gold initially fell before rallying, with a short-term fluctuation of $6; the dollar index's short-term increase expanded to over 30 points. The better-than-expected retail sales data led traders to reduce bets on Fed rate cuts in 2025.
According to CME's "FedWatch": The probability of the Fed cutting by 25 basis points by December is 61.9%, while the probability of maintaining the current rate is 38.1%.
BlackRock Chief Investment Officer (CIO) Rick Rieder stated that he still expects the FOMC to cut rates by 25 basis points in December. Rieder mentioned that the current target range for the federal funds rate of 4.5% to 4.75% is restrictive. After the rate cut in December, the Fed is expected to pause rate cuts, and the FOMC will assess the frequency and pace of rate cuts. By 2025, the Fed is expected to have cut rates at least twice.
Goldman Sachs Chief Economist Jan Hatzius still expects that "the Fed will cut rates in December, January, and March consecutively, and then cut once each quarter in June and September, but believes the FOMC may slow the pace of rate cuts more quickly, possibly as early as the December or January meeting." However, unless the employment or inflation report in November is unexpectedly strong, the likelihood of the FOMC skipping a rate cut in December is low.
The Fed's next meeting will take place on December 17-18.