Fed's Bowman advocates for a rate cut in September, as weak non-farm data ignites bullish expectations in the crypto market - September FOMC meeting's rate cut probability approaches 90%

Federal Reserve Board of Governors member Michelle Bowman publicly called for the Federal Open Market Committee (FOMC) to initiate interest rate cuts at the September meeting in response to signs of ongoing weakness in the U.S. labor market. The latest data shows that the probability of a rate cut in September has surged to 88.9%. If realized, this would significantly boost market liquidity and enhance risk asset preference, potentially bringing favorable information to the crypto market. This article analyzes the core logic behind Bowman's call for rate cuts, the shift in attitudes of FOMC officials, and the potential impact on the crypto market.

Bowman urges for a rate cut in September to prevent deterioration of the labor market According to Bloomberg, Federal Reserve Board of Governors member Bowman is urging her FOMC colleagues to start lowering interest rates at the meeting on September 16-17. She emphasized that this move is aimed at preventing further deterioration of labor market conditions and ensuring that if the job market accelerates its decline, there will be no need for larger emergency rate cuts.

As previously reported by CoinGape, the non-farm payrolls in the US increased by only 73,000 in July, far below expectations. At the same time, the data for May and June were also revised down, intensifying concerns in the market about the weakness in the labor market. As a result, the market's expectations for a rate cut by the Fed in September have surged to a high probability of 94%.

High probability of interest rate cuts in September, liquidity injection in the crypto market is on the horizon The latest data from the CME FedWatch tool shows that the market still bets on an 88.9% probability of a rate cut in September, indicating that the FOMC is highly likely to initiate a rate cut cycle at this meeting. This constitutes significant Favourable Information for the crypto market, as rate cuts typically inject more Liquidity into the market and significantly enhance investors' preference for high-risk assets.

(Source: CME FedWatch)

It is worth noting that at the July FOMC meeting, Bowman and another governor, Christopher Waller, were the only two members to vote in favor of a 25 basis point rate cut. Now, more FOMC officials are shifting towards a dovish stance. Minneapolis Fed President Neel Kashkari stated that the timing for a rate cut may be approaching, and San Francisco Fed President Mary Daly has recently expressed a similar view.

Bowman advocates for three interest rate cuts this year, downplaying concerns about tariff-induced inflation Bowman further stated that she supports the Fed lowering interest rates once at each of the three remaining meetings this year (September, October, and December), totaling three rate cuts for the year. She pointed out that the weak labor market data supports her stance for multiple rate cuts, and Daly also indicated that three rate cuts may be necessary.

At the same time, Bowman downplayed the potential impact of Trump's tariff policy on inflation. She reiterated that, as Fed Chair Powell stated, tariff-driven price increases are unlikely to significantly boost inflation. Given that inflation is still trending down towards the 2% target, she believes that the current policy focus should be on the weakness in the labor market.

Kashkari also acknowledged that Trump's tariffs did not significantly impact inflation as expected, and it would be better to lower interest rates early rather than wait to observe the long-term inflation effects of the tariffs. Although the Fed has recently adopted a "wait-and-see" strategy, the ongoing weakness in the labor market may make the September FOMC meeting a key turning point for policy.

Conclusion: The interest rate cut window opens in September, and the crypto market welcomes a key catalyst Bowman's strong stance on interest rate cuts combined with weak employment data makes a September rate cut by the Fed almost a certainty. If the FOMC proceeds with the rate cut as expected, it will provide strong liquidity support and boost sentiment in the crypto market, potentially becoming a key catalyst for driving Bitcoin and mainstream crypto assets to break out of consolidation. Investors should closely monitor inflation data and official speeches before the September meeting to grasp definitive signals of a policy shift.