HomeNewsFed’s Powell Holds Interest Rates Steady, Bitcoin Faces More Pressure

Fed’s Powell Holds Interest Rates Steady, Bitcoin Faces More Pressure

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  • Despite market expectations, Fed officials—including Powell—call for more talks on interest rate decreases, citing unanticipated economic resilience.
  • Delays in rate reductions have an effect on riskier assets, such as Bitcoin, which have seen strong market consolidation and persistent institutional interest in spite of challenges.

Contrary to financial analysts’ projections of rate cuts by June 2024, Federal Reserve officials, notably Chairman Jerome Powell, have signaled a cautious posture on the much-anticipated interest rate decreases.

This cautious attitude is the result of surprising statistics on inflation and employment growth that have exceeded earlier projections, indicating a potential economy that is stronger than previously thought.

Fed’s Cautious Stance

Powell cited recent economic data during his speech at the Stanford Graduate School of Business, indicating that employment gains and inflation rates have performed better than expected. Policymakers have largely agreed that there is a chance of rate cuts later in the year, subject to a confident decline in inflation toward the Fed’s 2% objective.

The current hesitancy on the part of the Federal Reserve is consistent with its larger policy to weigh the economic risks associated with premature interest rate decreases, which may make it more difficult to slow the economy in order to contain inflation. This cautious approach highlights how complicated the current economic environment is, with inflation continuing to be a changing objective.

Raphael Bostic, president of the Atlanta Fed, added to the conversation by speaking with CNBC and recommending a more conservative course of action that might include a potential drop of one quarter of a percentage point by the end of 2024.

Bostic’s forecast, which calls for sustained economic expansion and a slowdown in inflation, is in contrast to the Fed’s more aggressive cut predictions.

Consequences for Assets at Risk

For risk-on assets like Bitcoin and stocks, which generally do well in lower interest rate conditions, the delay in rate decreases presents issues. The price pressures on Bitcoin are evident in recent statistics from on-chain analytics firm Santiment, where a considerable fall has affected the capitalization and trading volumes of the broader cryptocurrency market.

Institutional interest in Bitcoin is still robust despite market volatility, indicating that many still believe in its value proposition even in the face of economic uncertainty.

In line with this opinion, financial advisor Robert Kiyosaki criticized the Fed’s present methods of managing inflation and highlighted the appeal of gold, silver, and Bitcoin as hedging assets against inflation.

Previously, ETHNews reported that Goldman Sachs predicted a Federal Reserve rate cut in Q3 2024, which would coincide with a notable increase in cryptocurrency valuations. This prediction came against a backdrop of economic scrutiny.

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Syofri is an active forex and crypto trader who has been diligently writing the latest news related to the digital asset sector for the past six years. He enjoys maintaining a balance between investing, playing music, and observing how the world evolves. Business Email: info@ethnews.com Phone: +49 160 92211628