Fed signals one more rate cut in December, CME tool shows 96.9% probability

Fed signals one more rate cut in December as Bitcoin holds strong above $100,000.

Photo: Kevin Lamarque

Key Takeaways

• The Federal Reserve is likely to implement a quarter-point rate cut in December with a 96.9% probability.
• Bitcoin has remained resilient and maintains trading levels above $100,000 amid monetary policy changes.

The Federal Reserve is expected to implement a quarter-point rate cut at its upcoming December meeting, lowering the benchmark rate to a range of 4.25% to 4.50%, according to a Bloomberg report.

This anticipated move aligns with market expectations, as indicated by the CME FedWatch tool, which shows a 96.9% probability of the reduction.

If implemented, it would mark a full percentage point decrease since September, highlighting the Fed’s ongoing efforts to manage economic conditions.

Market projections indicate fewer rate cuts in the coming year as inflation remains persistent and economic growth continues to show strength.

This outlook is bolstered by the core Consumer Price Index, which has risen 3.3% year over year and has remained consistently elevated since June.

Adding to this, labor market data reveals a reversal in unemployment trends, with recent job numbers showing a notable rebound, further supporting the economy’s resilience.

These economic indicators, along with inflationary pressures from President-elect Trump’s proposed tariffs and tax cuts, have shifted focus from employment to inflation.

While the Fed is expected to cut rates next week, economists predict the pace of cuts may diminish in 2025, with only three reductions anticipated due to persistent inflation and solid economic growth.

Amid this backdrop, Bitcoin has demonstrated surprising strength.

Over the past few days, Bitcoin’s performance has been buoyed by macroeconomic data, including the CPI, nonfarm payroll figures, and unemployment rate, alongside significant developments in US leadership.

Fed Chair Jerome Powell has highlighted Bitcoin’s growing prominence by describing it as a “competitor to gold.”

Adding to this momentum, President-elect Trump’s nominations of Paul Atkins for SEC Chair and David Sacks as crypto czar further reinforce Bitcoin’s potential strength heading into 2025.

The news of a potential Fed rate cut next week also adds to Bitcoin’s resilience, potentially supporting its strong performance in the near term.