Federal Reserve Governor Michelle W. Bowman recently announced that it is now premature to consider a rate cut in 2024. This statement comes at a time of heightened sensitivity in both traditional and cryptocurrency markets. The expected release of key economic data later this week further reinforces this situation.
Bowman emphasized in the statement that while the US has made some progress in managing inflation, the inflation rate remains high and faces various risks. This position is consistent with the Federal Reserve’s cautious monetary policy stance in uncertain economic conditions. She also stressed the importance of the Federal Reserve maintaining its independence and non-political position in the decision-making process.
These remarks were made prior to the second revision of the US first quarter GDP data, which will be released on Thursday, July 27. The US Personal Consumption Expenditures (PCE) data is expected to be announced on Friday.
Read more:
Nvidia continues to lose money – AI tokens are profitable
However, given that the average core consumer price inflation rate was 3.8% year-to-date in March, I expect the inflation rate to remain high for some time.
She also hinted at a possible deviation from global monetary policy trends.
Bearish Trend in Cryptocurrency Markets
The Federal Reserve’s monetary policy is putting pressure on the market conditions, including the cryptocurrency market. Higher interest rates typically strengthen the US dollar, thereby lowering the prices of assets, including cryptocurrencies. Conversely, lower interest rates usually encourage asset price increases, as investors seek higher returns in riskier markets.
Bowman claims that it is unlikely that there will be a rate cut before 2025, indicating that borrowing costs will remain relatively high, potentially hindering investment in the cryptocurrency market. This situation may exacerbate the recent cryptocurrency crash, as investors may favor safer and more profitable assets over unstable cryptocurrencies.
Read more:
Massive bankruptcies of large corporations raise concerns about a US economic recession
Recently, the cryptocurrency market has been volatile and unstable.
Bitcoin (BTC)
has recently dropped below $59,000 due to heavy selling. Factors contributing to this situation include recent BTC sales, the German government’s expected payment to Mt. Gox investors worth $900 million, which further worsened market sentiment.
However, the lack of expected rate cuts has intensified concerns about long-term market volatility. As traditional financial conditions tighten, interest in higher-risk assets such as cryptocurrencies tends to wane.
