One of the main triggers of the recent crypto bear market was the Federal Reserve’s historically rare move to raise interest rates. Front-loaded interest rates and balance sheet tightening caused fluctuations in risk markets. Although rate hikes have stopped after reaching a peak in the last few meetings, reductions have not yet started. So, what are Fed members saying in light of the latest data?
Statements from Fed Members
Inflation data came in higher than expected, and employment figures remained strong. On the other hand, Fed Chairman Powell mentions at every opportunity that a reduction of up to 75 basis points could be possible for 2024. Of course, the market is in an overly optimistic mode again, expecting even more. Today we saw significant statements from Fed members, and they are also firm on the 75bp topic.
This means we may not see a reduction in the next 2-3 meetings. Bostic had this to say on the matter;
“The economy still has tremendous momentum. I don’t think the market is being hasty about lowering interest rates. The January inflation data surprised me a bit, but it wasn’t a big shock. I want to be careful about not going too far with balance sheet reduction. I could support three rate cuts this year if we see positive data.”
Meanwhile, Fed’s Daly says the following as this article is being prepared;
“A slowdown in inflation without a significant drop in unemployment is definitely good news. Significant progress in inflation is not a victory. The Fed needs to resist the urge to act quickly when patience is required. Among the risks ahead are a slowdown in inflation progress and a stall in the labor market. We need more time and data to ensure that progress in inflation continues. Three rate cuts this year would be reasonable”.
Above, you can see the market’s expectations for interest rates this year.
