Bitcoin Price Drops as Powell Signals Delay in Interest Rate Cuts
The price of Bitcoin (BTC) fell 1% to around $62,900, coinciding with Federal Reserve Chairman Jerome Powell’s recent comments on the future of interest rates.
Speaking at a panel discussion on Tuesday, Fed Chairman Powell He underlined the need to maintain moderate monetary policy, justified by limited progress in achieving the Fed’s 2% inflation target. This stance means that higher rates could last much longer than most investors and analysts expect.
This position follows a series of strong economic figures, such as employment growth and retail sales, which show the economy is strong. 303,000 new jobs were added in March, far more than expected, and retail sales rose 0.7 percent instead of 0.4 percent as predicted.SUMMARY OF POWELL’S SPEECH AT THE WASHINGTON FORUM:
1. Powell warned that recent data show no further progress on inflation.
2. It will probably take longer than expected to build confidence that inflation will return to 2%.
3. Powell is preparing to leave interest rates at the same level… pic.twitter.com/AB4BypYWLl
— Jesse Cohen (@JesseCohenInv) April 16, 2024
The Fed has repeatedly used these indicators as the basis for a slow strategy to cut interest rates, despite pressure from different market segments to lower interest rates to support growth.
Market Reactions to Economic Indicators
The enduring strength of the US economy is acting as a catalyst for markets. A strong labor market and consumer spending are indicators of economic resilience, but they also hinder growth. Federal ReserveInflation management strategy and therefore interest policy. The Fed’s suggestion that interest rates will likely remain high to combat persistent inflation has dampened hopes for a rate cut, with negative effects on investment markets including cryptocurrencies and stocks.
U.S. stock indexes such as the S&P 500 and Nasdaq Composite were up about 0.1% halfway through the trading session.
Cryptocurrencies, on the other hand, responded poorly to Powell’s comments, and both have seen their values rise. Bitcoin and Ether is falling. Historically, Bitcoin has been highly affected by interest rate movements as it has tended to change the investment landscape by directing capital flows into riskier assets such as cryptocurrencies. While the upcoming Bitcoin halving is likely to impact supply dynamics, this has been neutralized by the bearish sentiment driven by the Fed policy outlook.
No immediate rate cut in sight
As the Fed’s next meeting approaches on April 30 and May 1, the central bank’s current stance indicates that a rate cut is unlikely in the near future. Analysts have revised their targets and predict that the first interest rate cut may not occur before September and that the possibility of additional cuts will decrease during the year.
This change is very different from the first half of the year, when multiple rate cuts were expected as part of the economic outlook.
Further confirming this cautious approach, Fed Vice Chairman Philip Jefferson made no mention of interest rate cuts in his recent statements and instead focused on readiness to maintain tight monetary policy. The Fed’s consistent message that interest rate decisions will be data-driven continues to guide market expectations and clearly underscores the need for more definitive signals that inflation is approaching target levels before any policy easing is considered.
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Kelvin is a distinguished author specializing in crypto and finance, with a bachelor’s degree in Actuarial Science. Known for her sharp analysis and insightful content, she is fluent in English and specializes in comprehensive research and on-time delivery.
The content presented may contain the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. Neither the author nor the publication accepts any liability for your personal financial loss.
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