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The finance and cryptocurrency world closely follows the Fed’s decisions, especially in light of recent positive inflation data. There is a general consensus among institutional companies that rate cuts could occur within this year. New York Federal Reserve President John Williams stated that rate cuts are on the horizon but the central bank is not yet ready to take action.
Disinflationary Trends Indicate Potential Rate Cuts
Williams indicated that if the downward trend in inflation continues, rate cuts could be possible in the coming months but ruled out the possibility of a rate cut in the Fed meeting two weeks from now. In his latest interview with the Wall Street Journal, Williams emphasized that the current favorable labor market conditions could help the central bank achieve its 2% inflation target.
Williams said, “We are getting closer to the inflation trend we are looking for,” and added, “These are positive signs, but I want to see more data to gain more confidence that inflation is sustainably moving towards our 2% target.”
As is known, the latest Consumer Price Index (CPI) data released by the U.S. Department of Labor indicates cooling inflation, with both annual and monthly figures showing a decline in the prices of most consumer goods. The annual inflation rate coming in better than expected at 3% has led market commentators to speculate about potential rate cuts. Fed Chairman Jerome Powell also recently indicated that rate cuts could occur before the 2% inflation rate is achieved.
On the other hand, Williams’ comments reflect the Fed’s more proactive stance in light of the recent cooling inflation figures. Powell noted that the central bank might not wait for inflation to reach 2% due to “long and variable lags” in the effects of monetary policy and increased confidence in current economic data. This proactive approach aims to maintain the positive disinflationary trend without waiting for the exact target to be reached.
Bitcoin and Altcoins Price in Fed Rate Cuts
Since Fed rate cuts are known to affect the prices of Bitcoin (BTC) and altcoins, these cuts are extremely important for the cryptocurrency market. Currently, the cryptocurrency market is facing a price recovery due to various industry factors. Policy observers believe that rate cuts could trigger a new wave of institutional investment in the cryptocurrency market.
Indeed, interest from traditional investors in spot Bitcoin ETFs in the U.S. has already increased, and Bitcoin’s price has risen above $65,000. With the expected approval of spot Ethereum ETFs, these ETFs could also attract significant inflows if the Fed decides to lower rates.
