Cryptocurrency bettors are pricing in a 50% chance that the Federal Reserve will enact the first interest rate cut of 2025 during the upcoming September meeting.
What happened: On the prediction platform Polymarket, the likelihood of a 25 basis-point cut was 50%, while the odds that rates would stay in the present range of 4.25%-4.50% were 43%.
The probability that the central bank would leave the rates unchanged during the July meeting was 96%.
These bets were similar to the CME FedWatch tracker, which showed a 56% chance of a 0.25% rate cut in September.
The Federal Open Market Committee, the policy-setting arm of the Fed, last cut interest rates in December 2024 by 25 basis points, lowering the federal funds rate to a range of 4.25%-4.5%.
See Also: Former Fed Chairs Ben Bernanke, Janet Yellen Warn Trump’s Pressure On Powell Could Lead To ‘Inevitably Higher Inflation And Economic Damage’
Polymarket, based on Polygon (CRYPTO: POL), allows users to buy "Yes" and "No" shares in USDC (CRYPTO: USDC) stablecoin. The shares representing the correct outcome are paid out $1 USDC each upon market resolution.
Why It Matters: The bets come in the backdrop of escalating tensions between President Donald Trump and Fed Chair Jerome Powell.
Trump has been critical of Powell's policies, accusing him of keeping interest rates "artificially high," and argued that the benchmark should be reduced to "1% or 2%," or half of what it is now.
Reports of Trump firing Powell also circulated briefly. However, the president later told reporters that it is “highly unlikely” to happen.
Powell has defended his decisions, stating that Trump’s tariff policies have deterred the central bank from implementing a more dovish monetary policy.
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