Bitcoin News Update: Interest Rate Reduction Seeks to Address Labor Market Slowdown Amid Easing Inflation

The Federal Reserve is expected to implement a 25-basis-point reduction in interest rates at its October 2025 session, with the likelihood of this action now standing at 98.3%, based on a

. This move, which has been broadly anticipated by both market participants and analysts, signals a shift in the Fed’s priorities from curbing inflation to supporting a labor market that is beginning to show signs of weakness. Although a government shutdown has postponed the release of most official economic statistics, the Federal Open Market Committee (FOMC) has relied on private-sector data and a shortened consumer price index (CPI) update to guide its decision, as highlighted in a .

While the rate reduction was largely foreseen, it is being positioned as a proactive step to prevent further weakening in employment figures. James Ragan, head of wealth management research at D.A. Davidson, pointed out that the labor market’s “fragility” and the absence of strong inflation signals have created a “more favorable” backdrop for policy easing, according to Bond Buyer. This approach is consistent with the FOMC’s recent Summary of Economic Projections, which indicated two more rate cuts this year and a gradual easing trend into 2026, as reported by Bond Buyer.

At the same time, the cryptocurrency sector has already factored in the Fed’s anticipated action, with

open interest climbing to $37.63 billion ahead of the announcement, according to an . Bitcoin’s price has surged from $107,600 to $116,000 over the past week, buoyed by expectations of a more accommodative monetary stance and a 92.6% implied probability of a rate cut in prediction markets. Optimism has also been fueled by French lawmaker Éric Ciotti’s proposal to establish a national Bitcoin Strategic Reserve targeting 2% of the total supply, with $931 million flowing into Bitcoin investment products last week, TradingView notes.

The anticipated rate cut is likely to have broader economic effects. The U.S. dollar, which is trading near its lowest level in a week against other major currencies, is under additional pressure as investors anticipate a dovish outcome, according to a

. For example, the Australian dollar gained 0.3% after higher-than-expected CPI figures cast doubt on a rate cut from the Reserve Bank of Australia, Reuters reports. In the housing sector, the Fed’s move could offer slight relief to mortgage rates, though lenders may remain wary due to ongoing inflation risks, as reported by a .

There is still uncertainty about when quantitative tightening (QT) will conclude. Some experts, such as J.P. Morgan’s Jay Barry, anticipate the FOMC will announce an end to balance sheet reductions at the October meeting, while others, including Wells Fargo’s Sarah House, expect this to happen in December 2025, according to Bond Buyer. The absence of official data complicates the Fed’s ability to make forward-looking decisions, and policymakers are likely to remain “data-dependent” despite the shutdown, Bond Buyer adds.

On the international stage, tensions between the U.S. and China may ease temporarily. Reports suggest the Trump administration is considering a 10% reduction in tariffs on Chinese fentanyl-related goods, which could prompt China to resume soybean imports and help reduce broader trade tensions, according to an

. If these measures are implemented, they could further boost risk appetite and strengthen the case for ongoing Fed easing.

The statement and press conference following the Fed meeting, led by Chair Jerome Powell, will remain closely watched by investors. Analysts expect Powell to emphasize the “risks are now more focused on employment” theme, likely downplaying the lack of government data and highlighting private-sector information, as Bond Buyer notes. The outcome will play a key role in shaping expectations for the December meeting and the future course of QT and rate reductions in 2026, according to Bond Buyer.