Markets are pricing about 30 basis points of easing for the Sept. 17 Federal Open Market Committee decision, split between a base case quarter point cut and a smaller tail for 50 basis points.
Should rates drop 50bps, Bitcoin could eye a return to all-time highs.
According to CME Group’s FedWatch tool, probabilities as of Sept. 10 at 7:30 A.M. CT stood near 90 percent for a 25 basis point move, about 10 percent for 50, and close to zero for no change, with an implied cut size of roughly 27 to 29 basis points.
Additionally, Polymarket’s $21 million prediction contract leans even further toward a potential 50bps cut. Predictions cluster around 81 percent for 25, 17 percent for 50, and 3 percent for a hold, which maps to about 28.8 basis points of easing.
The backdrop to the decision has shifted materially over the past two months.
A Bureau of Labor Statistics benchmark shows the United States created about 911,000 fewer jobs through March 2025 than initially reported, the largest downward adjustment since 2009.
Inflation progress is uneven by gauge, with core CPI near 3.1 percent year over year in August per the BLS and core PCE at 2.9 percent in July according to the Bureau of Economic Analysis.
The front of the Treasury curve reflects an easing path while the long end remains anchored by term premium and fiscal dynamics.
A Reuters strategist poll points to a steeper curve into year-end, with the two-year yield around 3.40 percent in twelve months and the ten-year yield near 4.25 percent, implying a two-tens spread near 85 basis points. Cleveland Fed economists place the nominal neutral policy rate near 3.7 percent, which means policy would remain above neutral even after a quarter- to half-point trim.
Near-term catalysts before the announcement can move the distribution. Producer prices came out at 8:30 A.M. ET today, consumer prices are due Sept. 11 at 8:30 A.M. ET, and retail sales are due Sept. 16 at 8:30 A.M. ET, per federal calendars.
PPI came out at -0.1, which pushed CME projections for a 50bps marginally higher to 10%, though Polymarket odds dropped slightly to 16%.
The other releases can shift the 25 versus 50 split and the near-term tone across risk assets, particularly through the two-year yield and the dollar.
25bps cut in September
A base case of a 25 basis point cut to a 4.00 to 4.25 percent target, paired with a balanced SEP, remains the market default. Street forecasts lean to a quarter point with two to three additional cuts in 2025, and the dots would likely reflect a shallow path into 2026 as growth marks ease.
In that scenario, rates markets tend to deliver a modest bull steepener, with the two-year down about 10 to 20 basis points over one to three days, the ten-year flat to 10 basis points lower, and the dollar down about 0.3 to 0.8 percent.
Equities usually key off the press conference tone rather than the statement alone, leaving SPY up roughly 0.3 to 1.2 percent if recession risk is not emphasized, based on prior FOMC day behavior.
For crypto, a dip in real yields and a softer dollar are supportive for BTC and ETH in the near run, on the order of 1 to 3 percent moves, though single cuts matter less than the path of liquidity.
50bps rate cut or hold
An upside easing case, a 50 basis point “insurance” cut to 3.75 to 4.00 percent, has gained probability after the BLS revision. Standard Chartered is calling for 50 in September after weaker labor data, while Bank of America projects two 25s in September and December.
If the Committee pairs a larger move with language that frames it as risk management rather than the start of an aggressive cycle, the curve could steepen more quickly. The two-year would be positioned for about 25 to 40 basis points lower over the next one to three days, the ten-year 5 to 15 lower given sticky term premium, and the dollar down roughly 0.8 to 1.5 percent.
Equities historically show stronger initial gains in larger-easing scenarios, leaving SPY in a 0.8 to 2.0 percent range, with a sell-the-news risk if the press conference emphasizes growth concerns.
BTC and ETH would have a cleaner impulse from easier policy and a softer dollar, on the order of 2 to 5 percent, tempered if equities read the move as a growth scare instead of a liquidity step.
A hawkish surprise, a hold with guidance only, remains a low probability outcome. That distribution expands if CPI and PPI deliver upside surprises. In that case, the two-year would be set for about 10 to 20 basis points higher, the dollar for 0.4 to 1.0 percent higher, SPY for declines in the 0.8 to 1.8 percent area, and BTC and ETH for 2 to 5 percent lower as real yields rise.
Research on predictable price moves around FOMC meetings shows the guidance channel drives much of the reaction, not just the rate print itself, which argues for close attention to the SEP path and Powell’s labor description.
The cross-asset context adds texture to those paths.
Gold has traded at record levels this week as rate cut odds have firmed and politics have added an additional bid, while oil remains headline sensitive in the Middle East with moves contained relative to prior spikes.
Bitcoin set a fresh record high near $124,000 in mid-August on easing bets, keeping the crypto tape sensitive to the mix of dollar direction, real yields, and growth language next week. The term premium’s stickiness can cap the ten-year’s downside even if the two-year falls, limiting the extent of euphoria in longer-duration assets.
Forward paths after September depend on growth prints, labor revisions, and the inflation mix. Markets and forecasters coalesce around two to three cuts in 2025 with a slower glide in 2026, which dovetails with the poll’s twelve-month, two-year, and ten-year anchors.
If growth weakens, the probability mass shifts toward a larger front load.
If inflation reaccelerates, the policy debate pivots to tolerance for core near 3 percent rather than a quick return to 2 percent. The Cleveland Fed’s neutral estimate provides a simple frame: Policy that remains above neutral even after the first move keeps financial conditions from collapsing, which matters more for the path of risk assets than the first step itself.
The checklist for decision day tracks the dots for 2025 and 2026 versus June, the wording around labor cooling or deteriorating, the two-year yield’s first hour trajectory, and the initial dollar move.
Those items will determine whether the outcome is a cut with caveats or a larger recalibration tied to the revised labor picture.
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