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Just minutes ago, Fed member Williams’s comments caused the price of Bitcoin to drop back down to the $42,200 region. After the Fed meeting, there was excessive optimism in the market and indications of a continued recovery approaching 2024. However, Williams believes it is time to balance these expectations, and his statements reflected this direction.
When Will the Fed Reduce Interest Rates?
Months ago, we mentioned that the Fed had unofficially announced its interest rate ceiling and that increases had stopped. This was indeed the case, as reflected in the latest statements by Powell. Now the real question is when interest rates will start to decrease. There is a strong belief in the market that reductions will begin with the March meeting, and everyone is certain that cuts will start at the beginning of the third quarter.
However, Fed member Williams said something to dampen this optimism and to convince investors that there would be no cut in March. This caused the price of Bitcoin to fall back to the $42,200 level once again.
When we focus on the important parts piece by piece, Williams said the following in his entire speech;
“We are at the right place for monetary policy, or close to it. The Fed should be ready to increase again if necessary. It is too early to even think about the timing of interest rate cuts. It is too early to think about a rate cut in March. The issue of interest rate cuts is not the main question in front of the Fed. The general financial conditions have tightened. We are not ready to say when we will stop shrinking the balance sheet. The Fed should focus on its targets, not market views. The market may be reacting stronger than predictions show. We will need to bring policy back to more normal levels over time. We must be prepared for unexpected events. My base scenario for the economy is good, inflation is falling. Views on the Fed’s interest rate cut are dependent on the views of individual officials. I am not speculating about what will happen with interest rates. We are focused on whether monetary policy is at the right place.”
His most striking sentence was this;
“Right now, we are really not talking about a rate cut.”
