Is the Fed predicted to raise interest rates by 25bps or 50bps in September?
From a fundamental perspective, the impact on the currency circle is that neither 25bps nor 50bps can provide liquidity to the circle, and PvP continues; nor can it change the position distribution of long positions.
Analysts unanimously expect a 25bps interest rate cut, but the market's call for a 50bps interest rate cut has traders still betting on 50bps.
The US core CPI in August exceeded expectations month-on-month, and housing inflation rebounded year-on-year, reminding the Fed that although inflation continues to improve, it remains sticky. If the Fed starts a series of large interest rate cuts, it will lead to loose financial conditions and a rebound in economic demand. From the perspective of the output gap, the necessary conditions for the Fed to cut interest rates may not be as strong as the market expects.
The current probability of interest rate cuts is comparable to that of 25bps and 50bps. Since 1970, there have been 11 interest rate cuts. In fact, we can divide them into two categories: preventive interest rate cuts and recessionary interest rate cuts. This time, the focus of everyone's attention is 25bp or 50bp. 25bp is more like a preventive rate cut, while 50bp is more like a recessionary rate cut.
These two numbers will determine our investment strategy. How will the price of cryptocurrencies trend? We will wait and see.