Federal Reserve Chairman Powell is delivering his second speech this week at the IMF, touching on important details. His statements on monetary policy also concern Bitcoin. Cryptocurrency investors have witnessed high volatility in the past few hours, and the Chairman’s remarks could continue this trend.
Fed Chairman Speaks
A 100bp interest rate cut is expected for next year, and the markets are satisfied with the weakening employment data. We have seen that the dominant view is that the Fed has reached the interest rate ceiling, which has attracted more demand in the risk markets. So what did Powell say?
“We are not sure if we have taken a restrictive stance enough. We expect moderate GDP growth in the coming quarters, but time will tell. The labor market continues to remain tight, but it is moving towards a better balance. We are pleased with the progress in inflation, but there is still a long way to go. We are cautious about the risk that stronger growth could undermine progress in inflation and that this could require a monetary policy response. If further tightening is needed, we will not hesitate. Much of the progress in inflation may need to come not only from supply-side improvements but also from tight monetary policy.”
Short-term US interest rate futures fell after Federal Reserve Chairman Powell’s remarks at the IMF. The Fed’s estimates for the first interest rate cut (FedWatch) were postponed from May to June prior to Powell’s comments.
The statements indicate that the threat of verbal guidance continuing and further increases, if necessary, may not be entirely favorable for cryptocurrency investors.
