Clear Signs of Economic Slowdown

In his remarks, Kashkari clearly stated that the economy is slowing. On the other hand, he noted that the impact of tariffs on inflation is still not fully understood. Despite this uncertainty, he said it may still be appropriate to begin adjusting the policy rate in the short term.

Two Rate Cuts Still Possible This Year

Kashkari stated that two rate cuts by the end of 2025 are still a valid scenario. However, there is an important condition here: if inflation starts to rise due to tariffs, the Fed may halt these cuts or even shift to a rate hike if necessary.

“Reversing Course May Be Better Than Waiting”

Kashkari emphasized that the time may have come to reverse course in rate policy, stating, “Reversing course may be better than waiting.” This message supports expectations that the Fed could move toward a monetary easing path in the fall.

Tariffs and Inflation Uncertain, But the Data is Clear

Kashkari said, “We don’t yet know what will happen with inflation, but the data we have on the slowdown is quite clear.” This indicates that the Fed may act based on growth data, even in the face of a murky inflation outlook.

Polymarket Data: Strong Rate Cuts Expectations

Meanwhile, with only 41 days left until the FOMC meeting on September 17, 2025, market expectations are already forming. According to Polymarket data:

• A 7% chance of a 50 basis point cut is expected,

• A 75% probability of a 25 basis point cut is projected,

• A 19% likelihood suggests no change in rates.

These figures indicate that markets are largely positioning toward a rate cut scenario.

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Nonfarm Payroll Data Misses Forecasts

The Labor Department’s Bureau of Labor Statistics (BLS) reported that the U.S. economy added 175,000 nonfarm jobs in April, falling short of the market consensus of 238,000. This marked the first time in five months that the nonfarm payroll data missed expectations.

The unemployment rate for April held steady at 3.9%, slightly above the forecast of 3.8%.

Bitcoin and the Market React

In the immediate aftermath of the data release, Bitcoin, which had been trading around $59,100, jumped to $60,330, a gain of over 2%. Ethereum (ETH) also experienced a surge, rising to $3,005.

The downward movement in nonfarm payroll data, which indicates a slowdown in job growth, is generally seen as positive for risk assets like Bitcoin. This is because a weaker labor market could lead to the Federal Reserve (FED) taking a more dovish stance on interest rate hikes.

The dollar index (DXY), which measures the value of the U.S. dollar against a basket of foreign currencies, also reacted negatively to the data, falling to 104.5 levels. This inverse correlation between Bitcoin and the dollar index is a well-established trend.

Looking Ahead: Inflation Data and FED Policy

The release of the nonfarm payroll data comes ahead of the crucial inflation data for May, which is scheduled to be published on May 15th. This data will be closely watched by investors and policymakers alike, as it could provide further clues about the trajectory of interest rates and the overall economic outlook.

The FED’s monetary policy decisions will continue to be a major driver of market sentiment in the coming months. Investors will be eager to see how the central bank reacts to the latest economic data and whether it will pivot from its hawkish stance.

Bitcoin’s Price at the Time of Writing

As of this writing, Bitcoin is trading at $60,215. The cryptocurrency market remains volatile, and investors should exercise caution and conduct thorough research before making any investment decisions.

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