Fed Chairman Jerome Powell said the US economy showed no signs of rushing to cut interest rates. Powell’s statements triggered selling pressure in the markets, and the price of Bitcoin (BTC) fell sharply from $89,500 to $88,160. Following the news of the lawsuit to be filed against the SEC, Powell’s statements neutralized the bullish expectations in the markets in the short term. However, it is stated that the general economic outlook is still positive in the medium and long term.
Why Did Bitcoin Fall?
Bitcoin fell to $87,831, losing value on signals that the Fed will not increase the pace of interest rate cuts. The Producer Price Index (PPI) and Consumer Price Index (CPI) data show that the decline in inflation is slowing down and that there is no economic stagnation. The Fed took a strong stance and stated that they will not be in a hurry to cut interest rates further. This situation raises the possibility that interest rates will remain constant in future meetings, even if no interest rate cuts are made at the December meeting. While markets had priced in faster interest rate cuts from the Fed, statements to the contrary led to a decline in prices. However, it is also noted that there is a weak possibility of an interest rate increase.
Key Points of Powell’s Statements:
The Fed makes decisions without considering the welfare of any political party.
The independence of the Central Bank means that its monetary policy decisions are irreversible.
He said the Fed doesn't need to rush to cut interest rates.
We expect interest rates to fluctuate around current levels and are monitoring this carefully.
Economic strength gives the Fed the ability to make careful decisions.
The labor market is strong and inflation continues to meet the 2% target.
In October, the personal consumption expenditures price index probably rose 2.3% from a year earlier (compared with a 2.1% increase in September).
The core PCE index rose 2.8% (after a 2.7% increase in September).
The US economy has been performing very well lately.
The labor market has largely been freed from inflationary pressures.
The Fed is closely monitoring the decline in housing services inflation.
Policy is moving toward neutrality over time, but no precise path has been identified.
Inflation will continue to fall, albeit occasionally fluctuating, in line with the 2% target.
The Fed continues to work determinedly to bring inflation under control.
Powell’s statements emphasized that there would be no rush to cut interest rates, and challenged the market’s expectations that interest rates would continue to increase in the short term. However, in the long term, the fact that economic fundamentals remain strong maintains confidence in the markets.
