- Fed Governors Christopher Waller and Stephen Miran expressed their support for another interest rate cut in December.
- Miran proposes “large rate cuts” due to tight monetary policy.
- CME Fedwatch and Polymarket indicate a significant jump in sentiment for another interest rate cut in the next FOMC meeting.
Cryptocurrency investor sentiment continues its gradual recovery, with Bitcoin (BTC) and other large-cap altcoins staging significant rallies after the weekend. One of the driving factors for their optimism was the positive outlook for another interest rate cut after the Federal Reserve’s Federal Open Market Committee (FOMC) meeting on December 9-10.
Two Fed Governors Favor a December Interest Rate Cut
Federal Reserve Board of Governors Members Christopher Waller and Stephen Miran recently confirmed their positions in separate interviews ahead of the upcoming FOMC meeting. The latter even proposed “large rate cuts.”
Waller told Fox Business on Monday that despite flying blind due to delays in the publication of economic reports during the 43-day government shutdown, the Fed’s anecdotal data suggested “nothing has really changed.” He claimed that there was “no evidence” of the labor market rebounding, while inflation “didn’t turn out to be quite as bad” in the latest Consumer Price Index (CPI) report.
The senior official said the weakening jobs market and cooling inflation both warrant a quarter-point rate cut. This would bring the figures from the prevailing 3.75%-4% short-term interest rates to 3.5%-3.75%.
Miran backed his colleague a statement on Reuters. He had bigger numbers in mind, but didn’t specify the figures. However, looking back at his stance in the last FOMC meeting, he may likely push for a 50-basis-point (bps) cut.
The central bank governor blamed the Fed’s restrictive monetary policy for the rising unemployment. Meanwhile, he highlighted that there’s no inflation problem in the economy despite acknowledging his concerns about the soaring cost of living.
Miran urged the Fed to implement a large cut to quickly achieve a neutral interest rate as well as sustain economic stability and growth.
Public Sentiment for Fed Rate Cut Climbs
CME Fedwatch, the CME Group’s forecasting tool based on the price of 30-day Fed Funds futures contracts, indicates that the probability of a 25-bps Fed interest rate cut is 82.7% as of Tuesday. This was a significant increase from 69.3% on Monday.
On the other hand, Polymarket’s decentralized prediction market reflected the same elevated sentiment for the same level of rate cut at 86%. Again, it was a considerable climb from 67% across the same comparative timeframe.
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