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The Fed rate cut expectation took a dramatic turn this week after Standard Chartered revised its September policy forecast, now predicting a 50 basis point reduction instead of the 25 bps it had previously expected. The move follows disappointing U.S. labor data that showed just 22,000 jobs were added in August, far short of the 75,000 forecast. Unemployment also rose to 4.3%, breaking out of its 15-month range.
Standard Chartered analysts said the U.S. labor market had gone “from solid to soft in less than six weeks,” suggesting that policymakers may have little choice but to act decisively.
“The slowdown has been sharper than anticipated, and the Fed will need to respond accordingly,” — Sarah Hewin, Head of Research for the Americas, Standard Chartered, said in a note.
Bank of America also adjusted its position, forecasting two 25 bps cuts in September and December. However, Standard Chartered cautioned that the larger September adjustment could prove a one-off, citing “sticky inflation and fiscal easing” as constraints on further reductions.
The new Fed rate cut expectation has triggered sharp repricing in futures markets, with traders now assigning near-certainty to a policy shift at the September 17–18 Federal Open Market Committee (FOMC) meeting. Investors are closely watching Fed Chair Jerome Powell’s scheduled address on September 17 for clear guidance.
“This is one of the most pivotal meetings of the year,” — Michael Feroli, Chief U.S. Economist at JPMorgan, told CNBC. “The Fed must balance a weakening labor market with still-elevated inflation. A larger cut in September would reflect urgency, but it would also raise questions about whether the Fed is falling behind the curve.”
While markets expect easing, analysts stress that the central bank will be cautious about signaling a sustained dovish path. A half-point cut would mark the largest single reduction since the pandemic-era emergency moves in 2020.
The ripple effects of the new Fed rate cut expectation extend well beyond traditional finance. Digital asset markets, particularly Bitcoin and Ethereum, have already seen renewed bullish momentum on the prospect of looser monetary policy. Lower borrowing costs and steeper yield curves tend to favor risk assets, and crypto has historically thrived in liquidity-driven environments.
Data from Deribit shows a surge in open interest for December 2025 Bitcoin call options, suggesting traders are positioning for macro-driven gains
“Crypto investors are interpreting the Fed’s pivot as a green light for further upside,” — David Duong, Head of Institutional Research at Coinbase, said in a market update. “Liquidity conditions are improving, and risk appetite is returning.”
If the Fed follows through with a larger cut, analysts argue that Bitcoin could benefit from renewed institutional flows as hedge funds and asset managers rebalance portfolios toward higher-beta assets.
The heightened Fed rate cut expectation also comes amid unusual political scrutiny. The Department of Justice recently issued subpoenas tied to mortgage fraud allegations against Fed Governor Lisa Cook, raising broader concerns about governance and the central bank’s independence. While unrelated to rate policy, the development has added another layer of uncertainty ahead of the September meeting.
For policymakers, this dynamic reinforces the delicate balance between addressing economic weakness and maintaining credibility. Market participants warn that if political or fiscal pressures appear to be influencing monetary decisions, investor confidence could waver.
For crypto investors, the new Fed rate cut expectation is more than just a headline. It represents a potential catalyst for the next leg of the market cycle. A deeper cut could unlock liquidity, boost borrowing, and reignite demand across both traditional and digital asset classes.
With September’s FOMC meeting looming, the stakes are high: a 50 bps cut would underscore the Fed’s urgency, while a smaller move could disappoint markets primed for aggressive action. Either way, crypto markets are already moving in anticipation, underscoring just how intertwined monetary policy and digital assets have become.
