Federal Reserve Chair Jerome Powell has indicated that the Central Bank will not adopt a wait-and-see approach until the interest rate dips to 2% before cutting interest rates. Recent data from the U.S. Labor Department shows declining inflation to 3% although still above the Fed’s 2% target. This increased bullish sentiment in the market as financial markets picked up after weekly lows.
Feds to Cut Rates Before 2% Mark, Powell Says
Jerome Powell noted that the Federal Reserve will not wait until inflation falls to 2% to slash interest rates citing macroeconomic conditions. Addressing the policy at the Economic Club of Washington D.C, Powell revealed the intention of the Feds regarding rate cuts highlighting “long and variable lags” as reasons.
The Federal Reserve has now pointed to greater confidence in the market that inflation will plummet to a 2% level. Powell noted that what drives the great confidence is the recent data and economic reality as inflation drops. The latest CPI data showed better-than-expected inflation data as monthly and yearly numbers dropped in several items.
“The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%.”
The Federal Reserve chair however cautioned that he is not making any projection at the time to expect interest rate cuts.
Possible Impact on Bitcoin
The Federal Reserve policies have an impact on the Bitcoin market sparking swings in different directions. A cut in interest rate will tilt macro factors in favor of the asset as investors move funds to risky assets. Stocks and traditional markets are also expected to witness a rally. However, the reverse which is becoming unlikely will cause stunted growth in the market.
As the industry anticipates price highs, several institutional firms have projected September cuts in light of cooling inflation with a second coming later in the year.
Also Read: Internet Computer Price Surge To $10 Could Mark Beginning Of The Bull Run
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