Fed Governor Hints at July Rate Cut, Potentially Fueling Crypto Rally

Federal Reserve Governor Christopher Waller has signaled a potential monetary policy shift, suggesting the first interest rate cut could come as early as July. This dovish stance emerges despite the Fed maintaining rates at 4.25%-4.5% since December 2024. Waller contends that Trump-era tariff impacts are now fully priced in, eliminating further downside risks.

The prospect of lower borrowing costs typically ignites risk-on sentiment across financial markets. Cryptocurrencies — particularly high-beta altcoins — often serve as primary beneficiaries of such liquidity injections. Historical patterns show crypto markets frequently front-run Fed policy changes, with traders anticipating capital rotation from traditional assets into digital ones.

Diverging views within the Fed create market uncertainty. San Francisco Fed President Mary Daly advocates delaying cuts until fall, emphasizing need for more labor market data. Yet 12 of 19 Fed meeting participants project at least one reduction this year, suggesting Waller's view may prevail.