Jerome Powell's Jackson Hole Moment: Crypto Traders See 85% Rate Cut Odds In 2025, While Morgan Stanley Says Fed Will Stay On The Sideline
Ahead of Jerome Powell's Jackson Hole address, crypto traders are betting on an 85% chance of interest rate cuts this year, according to Polymarket. In contrast, Morgan Stanley's chief economist believes the Fed will remain inactive for the rest of the year. The CME FedWatch tracker indicates a 75% chance of a 25 basis-point cut next month. This comes amid rising producer prices and inflation concerns, making Powell's speech crucial for future monetary policy decisions.
Ahead of Federal Reserve Chair Jerome Powell's pivotal Jackson Hole address on Friday, cryptocurrency bettors are pricing in more than an 80% chance that the central bank cuts interest rates this year.
Polymarket Bettors Confident Of Rate Cuts
On the prediction platform Polymarket, the likelihood that the Fed loosens its monetary policy on or before Dec. 31 stood at 85% at the time of writing. Nearly $990,000 has already been wagered on the bet.
Meanwhile, the CME FedWatch tracker showed a 75% chance of a 25 basis-point cut in next month's meeting, down from 92% a week ago.
Polymarket, based on Polygon POL/USD, allows users to buy “Yes” and “No” shares in USDC USDC/USD. The shares representing the correct outcome are paid out $1 USDC each upon market resolution.
What Are Major Banks Saying?
These odds contrasted sharply with Morgan Stanley chief economist Michael Gapen, who said in a recent interview with Yahoo Finance that the Fed will "remain on the sideline" for the rest of the year.
In contrast, other banking titans such as JPMorgan Chase and Goldman Sachs expect the central bank to slash interest rates in the upcoming September meeting.
The Backdrop
U.S. producer prices surged in July at the sharpest pace since mid-2022, reigniting concerns about the impact of President Donald Trump’s tariff policies on inflation. Investors scaled back their expectations after cooler-than-expected consumer inflation bolstered hopes of rate cuts.
The sentiment was further soured after the Fed indicated that inflation risks remain "considerable" due to the uncertain impact of trade tariffs.
Amid this backdrop, Powell's speech at the Jackson Hole Economic Policy Symposium holds great significance for the direction of monetary policy.
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%.
- Mohamed El-Erian Slams ‘Backward-Looking’ Powell, Question’s Fed’s 2% Inflation Target—’Being Too Late’
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