Bank of America has updated its interest rate forecasts, expecting cuts in 2025 due to unsatisfactory labor market data.
Forecast of Rate Cuts
Bank of America forecasts two rate reductions from the Federal Reserve by 2025, prompted by disappointing August employment data in the U.S. Economist Bradley Saunders from Capital Economics notes that this aligns with the negative trends in the labor market.
Cryptocurrency Response
Investors may become more interested in riskier assets like Bitcoin and Ethereum following the expected rate cuts. Historically, such shifts have positively impacted cryptocurrency markets as investors seek better yields.
Market Implications
The Coincu research team suggests that potential rate cuts could enhance liquidity flows into the cryptocurrency space, encouraging traditional investors to allocate more to digital assets during periods of lower interest rates.
The Federal Reserve's projected rate cuts by Bank of America highlight the importance of current labor market trends and their implications for financial and cryptocurrency markets.
