Why Crypto’s Rate Cut Hopes Are Premature – The Fed Isn’t Printing Money

Several crypto-related social media accounts are circulating rumors that the Federal Reserve will cut interest rates soon. These center around an out-of-context quote from Neel Kashkari, President of the Federal Reserve Bank of Minneapolis.

Susan Collins, President of another regional Fed bank, reiterated the low likelihood of any rate cuts. Currently, the CME Group estimates a 20.6% chance of them happening in the next month.

Federal Reserve Rate Cut Rumors Go Wild

As Trump’s tariffs have caused a huge amount of market instability, the crypto space has been desperate for a bullish narrative. A recurring hope has been that the Federal Reserve would cut interest rates, which seems highly unlikely.

Today, in a CNBC interview, a quote from Neel Kashkari, President of the Federal Reserve Bank of Minneapolis, fueled new rumors:

“There are tools there to provide more liquidity to the markets on an automatic basis that market participants can access, in addition to the swap lines you talked about for global financial institutions. Those tools are absolutely there,” Kashkari claimed.

Soon after this interview, several prominent crypto accounts began circulating pieces of this quote out of context. They implied that the Federal Reserve was on the brink of lowering interest rates to stave off potential economic turmoil.

Some of these erroneous claims managed to accumulate thousands of views and reposts on the idea that the Fed will “print money.”

However, in the full interview, Kashkari clearly stated what he meant by “tools.” He emphasized that the Fed is not concerned with global trade and that its “dual mandate” is to focus on inflation and employment within the US.

In other words, the tariff situation does not change the Federal Reserve’s low probability of cutting interest rates.

After these rumors began circulating, another higher-up discussed the Federal Reserve’s tools regarding interest rates.

In a subsequent interview with the Financial Times, Susan Collins, President of the Federal Reserve Bank of Boston, stated the Fed’s policy in very direct language:

“We have had to deploy quite quickly, various tools [to address the situation.] We would absolutely be prepared to do that as needed. The core interest rate tool we use for monetary policy is certainly not the only tool in the toolkit, and probably not the best way to address challenges of liquidity or market functioning,” Collins claimed.

Both Collins and Kashkari have roughly equivalent positions, heading one of the 12 Federal Reserve Banks distributed throughout the country. Both tried to clearly communicate that the Federal Reserve is not considering cutting interest rates at this time.

Despite this, social media rumors can quickly get out of hand.