TechFlow, September 17 — QCP released a briefing stating that the market widely expects the Federal Reserve to begin its current rate-cutting cycle tonight with a 25-basis-point reduction, lowering the policy rate to a range of 4.00%-4.25%.
Currently, investor focus has shifted to the Fed's Summary of Economic Projections (SEP) for clues on the pace and magnitude of rate cuts through 2025 and 2026. Market pricing suggests three cuts in 2025 and another three in 2026. Comments from Fed Chair Powell during the press conference will provide further details on the short-term policy path.
Market expectations are in a "Goldilocks" zone, where six total cuts are seen as a balanced midpoint. If the Fed's dot plot aligns with this view, it could support risk assets with accommodative financial conditions. However, any deviation from expectations may force investors to reassess, facing risks of a potentially tighter-than-expected policy stance or insufficient Fed capacity to respond to weakening economic growth.
Additionally, although liquidity conditions may become more accommodative, cryptocurrencies have consistently underperformed equities since August. Even if the Fed's action tonight meets market expectations, crypto assets may continue to lag behind stocks.
