The Fed's July decision shows increasing divergence, with US Non-farm Payrolls (NFP) data and Bitcoin trends attracting much attention.

On July 31, 2025, the Fed announced that it would maintain the federal funds interest rate at 4.25%-4.50%, marking the fifth pause in rate cuts since the easing cycle began in September 2024. However, this Federal Open Market Committee (FOMC) meeting set a record for the first time in 30 years with two governors casting dissenting votes—Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, both appointed by President Trump, advocated for an immediate rate cut of 25 basis points. Fed Chair Powell displayed a hawkish stance in the post-meeting press conference, emphasizing optimism regarding the labor market and ongoing concerns about inflation, leading to a significant cooling of market expectations for a rate cut in September. Powell explicitly stated, "It is too early to assert whether there will be a rate cut in September; we will reference economic data before the next meeting."

Fed internal division

One of the highlights of this FOMC meeting was the dissenting votes of two governors, marking the first significant divergence since 1995. Bowman and Waller's dovish stance reflects concerns among some officials regarding the economic slowdown, particularly the potential impact of the Trump administration's high tariffs on employment and consumption. The two advocated for a 25 basis point rate cut to support the labor market and alleviate economic uncertainty. However, Powell downplayed the internal differences during the press conference, emphasizing that the FOMC's decisions are based on "data-driven and risk-balanced" considerations, and reiterated that the Fed's independence is not influenced by political pressure.

Non-farm payroll data preview

The non-farm payroll data for July, which is about to be released tonight, is highly anticipated. The market expects an addition of 110,000 jobs, lower than June's 147,000, and the unemployment rate is expected to slightly rise from 4.1% to 4.2%. This data is below the average level of the past few months, reflecting a possible slowdown in the labor market, which may alleviate the Fed's concerns about wage inflation. However, if the data unexpectedly comes in weak, it may further raise expectations for a rate cut in September, leading to a rapid rebound in BTC; conversely, if it remains strong, a pause in rate cuts may extend until October or December.

Bitcoin trend

The hawkish tone of the Fed's July decision has put pressure on Bitcoin prices. After the announcement, Bitcoin prices fell, reflecting the market's concerns over a high interest rate environment. Wall Street Journal reporter Nick Timiraos pointed out that the FOMC statement included new wording regarding "magnitude and timing," suggesting a slowdown in rate cuts, which led to a decrease in the probability of a 25 basis point rate cut in September from 65% to 60.8%. The dollar index has risen, placing further downward pressure on crypto assets.

Tonight's non-farm data will provide new catalysts for Bitcoin's trend:

New Jobs: The expectation is 110,000. If it is significantly lower than expected, it may increase the probability of interest rate cuts and drive up Bitcoin prices; if it is higher than expected, it may strengthen the expectation of pausing interest rate cuts, and the dollar and yields may rise further, potentially causing Bitcoin to break below the support level of $116,000 and test the $110,000 mark.

Unemployment Rate: Expected at 4.2%, if it rises to 4.3% or higher, it may trigger market concerns about economic slowdown, raising expectations for interest rate cuts.

In addition, the short-term effects of Trump's tariff policy have not fully manifested. Powell pointed out that tariffs may lead to a "one-time price shock," but the long-term impact needs further confirmation from the data in August and September. If the tariff effects are mild, the Fed may lean towards cutting interest rates; if they raise inflation, the pause in rate cuts may extend until 2026.

This article is for informational sharing only and does not constitute any investment advice to anyone.

Join our community to discuss the event.

Official Telegram community:

Chat Room: Wealth Group