Crypto investors woke up to relatively strong markets this week, with BTC maintaining its $27,000 level. Typically, the Fed has brought about a decline in previous weeks, but there is currently nothing to fear. On the other hand, global market expert Nouriel Roubini made some statements that undermined optimism.
Global market economist Nouriel Roubini made some statements that worried investors in the risk markets. In his latest interview with Bloomberg, the renowned economist, also known as Dr. Doom, says that despite market optimism, it is likely that the Fed will keep interest rates higher in the foreseeable future. According to Roubini, we are far from the Fed’s 2% target, and there are many factors preventing the achievement of this 2% target.
Dr. Doom said that he does not expect the Fed to cut interest rates in the near future;
“The markets still believe that inflation will decrease to 2% and that the Fed will cut interest rates aggressively. The Fed is against this… They are essentially saying that interest rates will remain high for a longer period of time. Not only the Fed, but other central banks are also taking steps in this direction. They imply that inflation could be higher due to globalization, aging, geopolitical factors, and other negative supply shocks. Therefore, I still think that the markets are a bit too optimistic that the Fed will cut interest rates aggressively starting in the early months of next year. It will not be the case.”
Experts expected a rate cut to occur as of the beginning of the second quarter. Indeed, there is no guarantee that the Fed will not raise interest rates today or on November 1st, without announcing whether the interest ceiling has been reached. If the interest ceiling is announced today, we can see the first interest rate cut in the best-case scenario at the beginning of the second quarter. A later announcement would be detrimental to cryptocurrencies.
On the other hand, Dr. Doom says that worse things are awaiting us, something that most people overlook.
“The good news is that it doesn’t seem like we will experience a real hard landing. The real question is whether we will have a soft landing or a bumpy landing. We don’t know anything about this debate yet. There are longer and more variable lags in monetary policy. The Fed may need to do more hikes. As financial conditions tighten, credit problems may arise. Rising oil prices mean higher inflation and even lower economic activity, even in the United States. Therefore, I can say that it is still an open question whether we will experience a real soft landing rather than a short and shallow recession, even for the United States.”
A possible recession will be detrimental to cryptocurrencies.