The Federal Reserve (FED) has maintained a steady interest rate for quite some time now, but expectations for interest rate cuts in 2024 are dwindling. Currently, the focus is on the FED’s upcoming decision on July 31, with a majority of 89.7% pricing in the possibility of interest rates staying constant, according to CME FedWatch. While some experts anticipate a single rate cut in September, others are predicting two cuts, in September and December.
FED member Michelle Bowman, with voting rights in the Federal Open Market Committee (FOMC), recently reiterated her stance that maintaining the policy rate at its current level for some time would be sufficient to control inflation. She expressed caution regarding interest rate cuts, stating that it is not the appropriate time to begin reducing rates. Bowman also mentioned the possibility of increasing rates if inflation does not decrease, pointing to a potential timeline for rate cuts in 2025 based on economic data meeting certain criteria.
In terms of inflation, Bowman highlighted the necessity of raising interest rates if inflation starts to rise again, emphasizing the importance of closely monitoring economic data to assess the restrictiveness of monetary policy in addressing inflation targets. While there has been some progress in inflation during 2024, she expects inflation to remain elevated for the foreseeable future.
The cryptocurrency market, particularly Bitcoin, experienced a peak in November 2021 when the FED began increasing interest rates. The subsequent bear market is believed to be directly linked to the FED’s rate hikes, leading to speculation that a policy shift and potential rate cuts could potentially revive Bitcoin’s price to its previous highs. As the FED gears up for potential rate cuts, there is anticipation for an uptick in BTC and other cryptocurrencies.
It is important to note that the information provided in this article is not intended as investment advice, but rather as an analysis of the current economic landscape and its potential impact on cryptocurrency markets. Investors are advised to conduct thorough research and consult with financial experts before making any investment decisions.
