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The world of cryptocurrencies faces unsettling hours as a challenging week comes to a close. Tomorrow’s PCE data could surprise the market, potentially causing fluctuations of 5-10%. Meanwhile, statements from Trump and members of the Federal Reserve are drawing attention. Recent announcements have significant implications for market dynamics.
Key Announcements
A representative from the Trump administration expressed satisfaction with the UK’s plan to increase defense spending. Following this, Fed member Barkin stated that the public must adjust to high mortgage rates similar to those seen in 2004-2005. This sentiment undermines any optimism regarding interest rate cuts.
Trade Tariffs and Economic Outlook
Trump announced that tariffs for Mexico and Canada would take effect on March 4, along with an additional 10% tariff on China. He mentioned a reciprocal tariff structure would commence on April 2, following his recent announcement of a 25% additional tax on the EU. The EU has yet to respond with their retaliatory measures, which could further destabilize cryptocurrencies when they are revealed.
Fed member Barkin responded to suggestions of raising the inflation target from 2% to 3%, stating this is not feasible. Additionally, Fed member Schmid noted that uncertainty could pressure growth, emphasizing that recent sharp rises make it impossible for the Fed to relax its stance. Maintaining credibility requires continuous focus on inflation, and he expressed caution regarding inflation expectations.
