Federal Reserve Governor Mester calls for a 50 basis point rate cut in December

Federal Reserve Governor Mester publicly made extremely dovish remarks, directly stating that a 50 basis point rate cut in December is appropriate, emphasizing that at least a 25 basis point cut is necessary to prevent tightening policies from continuing to pressure the labor market. Mester has a close relationship with President Trump, and his comments carry significant weight.

This statement was made against the backdrop of internal disagreements within the Federal Reserve regarding the next interest rate decision. St. Louis Fed President Bullard urged caution in rate cuts, predicting a strong rebound in the economy in the first quarter of next year. The two completely different viewpoints reflect a profound division among decision-makers regarding the economic outlook.

The appeal from Milan is one of the strongest dovish signals that the market has been expecting. If the Federal Reserve adopts this view, it would be a significant positive for risk assets, especially cryptocurrencies, as interest rate cuts mean lower funding costs and expanded liquidity. Although the CME FedWatch shows a 64.1% probability of a 25 basis point cut in December, if the 50 basis point proposal is accepted by more committee members, the market's re-pricing of easing expectations would accelerate significantly.