Investors Brace For Fed’s Rate Cut Verdict

This Wednesday, September 17, the US central bank is expected to cut its key interest rate by 25 basis points. A decision already priced in by the markets, but far from trivial, as inflation remains above target and employment slows down. Behind this monetary shift, investors are looking for a signal. Temporary shock or catalyst for a new cycle ? From bitcoin to gold, through Wall Street, all assets are watching Jerome Powell’s verdict.

Contrasting Economic Signals Before the Decision

While the ECB freezes rates at 2% , the latest economic indicators offer a nuanced picture ahead of the Fed meeting :

• Inflation : the Consumer Price Index rose by 0.4 % in August, bringing annual inflation to 2.9 %. The core CPI, excluding food and energy, increased by 0.3 % ;

• Producer price : the PPI fell by 0.1 % in August but remains up 2.6 % year-on-year, while the core PPI climbs 2.8 % ;

• Labor market : only 22,000 non-farm jobs were created in August, a marked slowdown, while the unemployment rate remained stable at 4.3 %;

• Bond yields : 2-year yields hover around 3.56 %, compared to 4.07 % for 10-year, maintaining a slightly inverted curve.

These elements reflect the complexity of the moment : persistent inflation, a labor market losing momentum, and a bond dynamic that continues to signal some economic fragility. The Fed must balance the need to support activity with the risk of rekindling inflationary pressures.

Bitcoin, Gold, and Stocks Tested by a New Monetary Phase

Beyond macroeconomic figures, investors are already observing the concrete consequences of monetary easing. Indeed, bitcoin currently trades around 115,880 dollars, down from its August peak near 124,000 dollars.

Gold, the quintessential safe haven, remains close to its records at 3,643 dollars an ounce, while the S&P 500 and Nasdaq trade at historic levels, boosted by expectations of a rate cut. Risky assets like bitcoin and stocks could benefit from sustained support if monetary policy becomes more accommodative.

Moreover, the probability of easing is already priced in at 93% by the markets via futures contracts. A disappointing reaction could cause a quick correction before the effects of a looser policy are felt. For investors, the short term may therefore mean volatility, while long-term prospects remain geared toward an environment more favorable to liquidity.

Between mixed economic figures and already high expectations, the September 17 meeting appears as a major test for the Fed. A rate cut, as advocated by Christopher Waller, probable successor to Powell , could provide lasting support to financial assets.