September Jobs Data Could Delay Fed Rate Cuts, Impacting Crypto Prices

• September’s US jobs report unveiled a decline in unemployment with the addition of 254,000 payrolls.
• The report sparks discussion about the Fed’s potential decision on the interest rate cut.
• Experts say that the Fed may consider a smaller rate cut of 25 bps instead of the larger 50 bps.

In a report from the Wall Street Journal, Chief Economist Correspondent Nick Timiraos suggested that the September jobs report could heavily influence the Federal Reserve’s decision on interest rates. He believes the Fed is now less likely to cut interest rates by 50 basis points (bps) next month, due to the stronger-than-expected jobs report.

Data from the Bureau of Labor Statistics revealed 254,000 new jobs added in September. The report showed a stronger US jobs market with an unexpected drop in the unemployment rate. Additionally, US wage growth accelerated to 4% annually, up from 3.9% in August, indicating increased inflation pressures. Monthly wages also rose by 0.4%, matching August’s rate.

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The strong labor market data has prompted discussions among industry experts. Last month, the Fed cut rates by 50 bps, citing mild summer inflation and signs of a weakening labor market. After September’s jobs report, Timiraos mentioned the Fed might consider a smaller 25 bps rate cut. According to the CME FedWatch Tool, market expectations for a 50-basis-point rate cut in November dropped to 8%, down from 53% last week.

The jobs report has also sparked debate on whether to shift from tightening to loosening monetary policy. Capital Economics chief North America economist Paul Ashworth wrote:

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

Last month’s interest rate cut triggered a crypto rally, with Bitcoin surging above $65k. Altcoins also showed strength following the Fed’s rate cut. As investors speculate on the Fed’s upcoming interest rate decisions, all eyes are on how the crypto market will respond.