In-depth: Recently, the cryptocurrency circle has begun to spread the news that the United States will not cut interest rates this year, and may raise interest rates to 8%, which has confused the entire cryptocurrency market.
What is going on? Let's discuss it today.
Recently, I have also read a lot of analysis by big guys, including some very good analysis by @Phyrex_Ni Ni Da and @Trader_S18 T Da. It may be a bit difficult for novices to understand. Today I will describe some of my views in a simpler way:
1️⃣ First of all, novices need to understand the basic common sense:
Interest rate hike: The central bank raises interest rates to curb inflation and control economic overheating.
Interest rate cut: The central bank lowers interest rates to stimulate economic growth and boost consumer investment.
CPI (Consumer Price Index): An indicator that measures changes in the prices of a basket of consumer goods and services, used to assess the level of inflation.
2️⃣ Let's talk about the source of the news first:
Recently, the cryptocurrency circle has begun to spread that the United States will not cut interest rates this year, and may raise interest rates to 8%?
The news is mainly that Jamie Dimon, CEO of JPMorgan Chase, warned the market a few days ago. He believes that due to the excessive US government spending, US inflation and interest rates may continue to be higher than market expectations, and he is ready for the Fed to raise interest rates to 8%.
So some KOLs and media began to amplify the news, and even spread it as "The Fed announced a future interest rate hike to 8%"
3️⃣Is the interest rate hike to 8% credible?
On the 9th, the old lady returned to China, and she was not very happy that this visit did not meet expectations.
On the 10th, the CEO of JPMorgan Chase, the owner of a large chaebol, made a harsh statement that the US dollar is ready to raise interest rates to 8%.
It is not convenient for the US authorities to say such harsh words, and it is not convenient for senior officials of the Federal Reserve to say it, so they entrust a capital institution that everyone knows and does not represent the official to make a statement.
The advantage of such a commission is that it will not be too embarrassing if the interest rate is lowered in a while.
There are also advantages to making a statement, one is a threat, and the other is a test. This trick has been played in the world for a long time.
As for Dimon's statement that the interest rate will be raised to 8%, whether the market believes it or not, I don't really believe it, because 8% is too much pressure for American banks, not to mention that the global economy is still in recession.
It is hard to imagine what American banks need to invest in to cover this 8% interest?
