Powell has made significant remarks, emphasizing a serious approach to employment contraction. While this is a positive development, there is still no clear roadmap regarding interest rate reductions. Details on the speed and continuity of inflation growth were also positive. Uncertainty remains the biggest problem for the Fed. This indecision continues to be a major challenge for the Fed.
The Landscape of Cryptocurrencies
BTC is valued at 115,600 dollars as this article is prepared, with markets clearly expecting a reduction by the end of the upcoming month’s meeting. Powell highlighted the difficulty in shaping policy decisions but noted that the risk balance is disrupted by weakening employment. His emphasis on reduced inflation risk compared to April was quite positive for cryptocurrency investors.
“Latest indicators show that economic growth slowed in the first half of the year. Employment growth has slowed and the unemployment rate has risen yet remains low. Inflation has increased and continues to hover high. The Committee aims to achieve maximum employment and 2-percent inflation in the long term. Uncertainty regarding the economic outlook remains high. The Committee is alert to risks on both sides of its dual mandate and finds downside risks to employment increasing.” – Fed Statement
In the U.S., both labor force and labor demand are contracting. However, as demand decreases faster, the risk of a spike in unemployment becomes apparent. This situation has created a relaxed environment beneficial to cryptocurrency investors.
Fortunately, Powell announced that the prioritization of an inflation-oriented policy is over, and decisions will be made based on data received from meeting to meeting. Although stating that there is no alarm point in employment, leaving the door open for interest rate cuts was relatively positive.
What Lies Ahead?
Powell’s statements are measured, neither suggesting a clear interest rate reduction nor implying a status quo. The real upswing environment for cryptocurrencies will shape up with the September unemployment and inflation figures coming in October. We are heading toward days where this data becomes crucial.
As inflation comes in below expectations, cryptocurrencies will rise. If employment reports are worse than expected and confirm the contraction, cryptocurrencies will rise. However, if the opposite occurs, with monthly inflation surpassing the 0.3 percent band or encouraging signals of recovery in employment, it will negatively affect the beginning of the last quarter for cryptocurrencies.
Stephen I. Miran will be our advocate, calling for a 50 basis point cut and soon adding a dissenting opinion to the decision. Bowman and Waller could raise their voices in favor of crypto if employment and inflation figures align in the coming days. We are heading into days where U.S. data is much more important for cryptocurrencies. If the data is disclosed as required, interest rates will continue to decrease, laying the foundation for crypto investors’ data-driven growth expectations.
We will watch and see what happens. This process is a period where news flow becomes much more important. The CryptoAppsy news section could prove useful in the coming weeks, particularly until the October 29 interest rate decision, both for Fed statements and data flow.
