BlackRock CIO Predicts 25 BPS Fed Rate Cut After US Job Data

Following the release of US job data, BlackRock CIO Rick Rieder has predicted that the Federal Reserve will cut interest rate further by 25-basis-point. Per his projection, this will come when the Federal Open Market Committee (FOMC) meets in November.

US Job Data Drops From August Level

The September jobs report came in stronger than expected in the United States. According to the data from the Bureau of Labor Statistics, released on Friday, the labor market added 254,000 to the payroll in September. This is more additions than the 150,000 that economists expected. Considering both the July and August report, the US economy added 72,000 more jobs during those two months than previously reported.

Additionally, the US unemployment rate for September dropped to 4.1%, from 4.2% recorded in August. Recall that the bank announced a 50-basis-point cut on September 18. On the premise of the latest job data, Rieder opines that the US economy can still accommodate further interest rate cut for the November meeting. He believes that going below further will carve a more modest path for the American economy.

Morgan Stanley Global Chief Economist Seth Carpenter also holds the same view as Rieder. Some others like Capital Economics Chief North America Economist Paul Ashworth, does not think the Fed would want to introduce any rate cut at all.

“Looking at the labour market strength evident in September’s employment report, the real debate at the Fed should be about whether to loosen monetary policy at all,” he said. “Any hopes of a [50 basis point] cut are long gone.”

At the moment, market experts are divided on the direction of rate cut the Feds might pursue. Bank of America (BofA) is also optimistic about a 25 BPS rate cut.

Bitcoin and Crypto Market After 25 bps Rate Cut

A further drop in interest rate could send high risk assets like Bitcoin to a new All-Time High (ATH). These kind of assets usually moves at the slightest sign of monetary easing. When the 50 bps rate cut came in September 18, BTC jolted to around $62,000.

Since that time till now, Bitcoin has seen some fluctuations. At the time of this writing, the flagship cryptocurrency was trading at $62,139.71, corresponding with a 3.34% increase in the last 24 hours. Should the projected 25 bps be implemented, Bitcoin may get a new boost that might see it breach its past ATH, exceeding $73,750.

It is worth noting that the price of the digital asset is influenced by a number of factors as well. These include global economic conditions, inflation expectations, central bank policies, regulatory environment, institutional investment and mrket sentiment.