Solomon: A 25 Basis Point Cut Is More Realistic

In an interview with CNBC, Solomon stated: “I don’t think a 50 basis point cut is on the table.”

Market data aligns with his cautious stance. According to the CME FedWatch Tool, only 7.8% of traders anticipate a half-point cut at the September 17 meeting. Instead, a dominant 92.2% expect a smaller 25 bps reduction. Solomon himself emphasized that this measured step is the more probable outcome.

Signs of a Softening Labor Market

Beyond rate speculation, Solomon highlighted emerging weakness in the U.S. labor market:
“There’s no question that we’re seeing some softening in employment trends,” he said.

He added that depending on how economic conditions unfold, one or even two more rate cuts could still occur before the end of the year.

Implications for the Crypto Market

Lower interest rates tend to reduce the appeal of safer assets like bonds, often pushing investors toward higher-risk, higher-reward markets such as cryptocurrencies.

Crypto trader Mister Crypto suggested on X that a 50 bps cut would trigger explosive growth: “If that happens, crypto will smash through previous all-time highs.”

However, blockchain analytics firm Santiment issued a cautionary note. The surge in social media hype around a September cut, the platform warned, may indicate investor euphoria is overheating—often a signal of a potential local top.

Shifting Bank Forecasts

Standard Chartered recently revised its outlook, pointing to August’s weaker-than-expected jobs data as justification for seeing a 50 bps cut within the realm of possibility.

Meanwhile, Bank of America, which previously ruled out any cuts in 2025, has reversed course. The bank now projects two separate 25 bps reductions—one in September and another in December.

These adjustments followed Fed Chair Jerome Powell’s remarks at the Jackson Hole Economic Symposium on August 22, where he hinted at a possible rate cut in the near term.

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