Fed Officials Withdraw Pre-June Interest Rate Cuts, Macro Pressure Increases on Bitcoin
U.S. Federal Reserve officials backed away from early rate cuts after Friday’s strong jobs report showed the resilience of the U.S. economy. Federal Open Market Committee (FOMC) members Austan Goolsbee and Michelle Bowman are more reluctant to cut rates in the first half of 2024.
Employment Data Reduces Chances of Fed Rate Cut in May or June
Non-farm employment in the USA increased by 353 thousand in January, the biggest increase in 12 months, above market expectations of 180 thousand. The strong jobs report was warmer than December’s upwardly revised figure of 333K. The unemployment rate remained stable at 3.7%. The Fed has left interest rates unchanged for the fourth year in a row, and employment data clearly showed there is more room for the Fed to delay rate cuts after June.
President of the Federal Reserve Bank of Chicago Austin Goolsbee He said the Fed needs more evidence that it is moving toward its 2 percent inflation target before cutting interest rates. He ruled out a rate cut in March, as Fed Chairman Jerome Powell alluded to in the FOMC press conference.
“I don’t like to tie our hands too early when there is weeks and months of data to come. We must make our decisions based on how the actual data comes in. “Increasing progress like what we’re seeing in inflation and employment is what we need to see to feel comfortable that we’re on target.”
Also Governor of the Federal Reserve Michelle Bowman We expect inflation to cool further as the Fed keeps interest rates at their current level. He said it was too early for Fed officials to consider lowering interest rates, according to Reuters.
“In my opinion, we’re not there yet,” Bowman said. “I will remain cautious in my approach while considering future changes in policy stance. “Cutting our policy rate too soon could result in requiring further policy rate increases in the future to return inflation to 2% over the long term.”
US economic data is coming in hotter, including the latest retail sales print, which shows the resilience of the US economy. BlackRock expects the Fed to start cutting interest rates earlier than the European Central Bank (ECB) in June. The Fed has proposed cutting interest rates by 75-100 basis points by the end of the year.
Bitcoin Under Selling Pressure
Investors are watching the Fed and Treasury Department’s plan to prevent a banking crisis like the one last March. Bank Term Funding Program rescues (BTFP) ended inside March macro puts pressure on Bitcoin.
The US 10-year Treasury yield rose back above 4% following the jobs report. Currently US10Y is at 4.024%, down from 3.88% on February 2nd. Additionally, the US Dollar Index (DXY) rose to a seven-week high of 104 on Friday as investors lost confidence in the Fed’s expectation of a rate cut in March.
Bitcoin is moving against Treasury yields and the US dollar. Macro could delay BTC price rise following Bitcoin halving amid increasing macro pressure.
BTC price held above $43,000 after a 3% increase this week. The 24-hour low and high are $42,584 and $43,422 respectively. Additionally, the 20% decrease in trading volume in the last 24 hours shows that investors’ interest has decreased.
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Varinder has 10 years of experience in the Fintech industry and has been dedicated to blockchain, crypto and Web3 development for over 5 years. A tech enthusiast and analytical thinker, he has shared his knowledge of disruptive technologies in more than 5,000 news stories, articles, and articles. Varinder believes in the great potential of future innovative technologies with parofix Media. He currently covers the latest updates and developments in the crypto industry.
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