The interest rate hikes of the US Federal Reserve were undoubtedly among the instances responsible for containing the growth of the crypto market. Not just crypto, but the broader financial market suffered a great deal too. Amidst the expectations of a Fed rate increase to take a halt, Central Bank Chair Jerome Powell’s statement hints at another hike down the road.
In his speech during the ongoing Jackson Hole Symposium, Powell repeated the central bank’s stance to bring inflation down to 2%.
Many economists have already suggested the goal is not the easy one to achieve. This makes sense despite raising interest rates about 11 times since June 2022 up to 5.5%, yet the inflation is stalling above 3%.
Prior to the Fed’s symposium at Wyoming, investors were expecting the indication of halting the increasing interest rates, and even the rate cuts in the future. However, following Powell’s affirmation to bring inflation down suggests interest rate hikes should be expected.
The last interest rate increase from the Fed was seen in July this year when the central bank pushed the rate by 25 basis points.
As far as the highly anticipated ‘interest rate cuts’ expected by the financial markets, it could take until the second quarter of 2024 to take place.
The Federal Reserve was quite successful in its efforts to tame the soaring inflation and saved the economy from falling into the looming recession. The rate of inflation in the United States was above a whopping 9% during June 2022 which was brought down to 3.1%.
In a recent article in the New York Times, well-known economist Paul Krugman expressed his viewpoint that the Federal Reserve might consider aiming for a 3% inflation target instead. He contended that sticking to a 2% target is likely not a sound economic practice.
Crypto Market Stays Neutral Despite Federal Reserve’s Hints
Despite the almost confirmation of a potential interest rate hike, major cryptocurrencies did not react as much as the prices stayed at similar points where they were yesterday.
Bitcoin (BTC) is trading at $25,997 following a 0.4% decrease in the last 24 hours while Ethereum (ETH) price is at $1,647 after a 0.46% drop in a similar time frame.