Concerning inflation
Jerome Powell surprised observers during his speech at the Economic Club in Washington, D.C., when he stated that the Federal Reserve will not wait until inflation reaches 2% before cutting interest rates. This announcement represents a turning point in US monetary policy.
The Fed Chairman justifies this position by pointing to the "long and variable delays" of monetary policy. He believes that waiting too long could push inflation below the 2% target. As a result, the Fed is now seeking "greater confidence" in bringing inflation back to its target. This more flexible approach could stimulate the economy more quickly.
Impacts on the cryptocurrency market
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The cryptocurrency market reacted mixed to these announcements. Some assets recorded significant gains. For example, Dogwifat (WIF) and Floki (FLOKI) jumped more than 20% in 24 hours. Bitcoin, on the other hand, reached a one-month high of $65,025.
The possibility of interest rates being cut faster than expected is particularly encouraging. Indeed, cryptocurrencies have suffered in recent weeks from uncertainty over monetary policy. Lowering interest rates could revive risk appetite and boost investments in the cryptocurrency sector.
However, if inflation persists despite the Fed's efforts, the cryptocurrency market may face challenges. Persistent inflation may force the Fed to keep interest rates high for longer than expected, which would dampen risk appetite and could lead to a decline in investments in cryptocurrencies.
Jerome Powell's statements open new horizons for the cryptocurrency market. The possibility of interest rates falling faster than expected may stimulate interest in digital assets. However, investors remain cautious and alert to the Fed's upcoming decisions. The future of the cryptocurrency market in 2024 will largely depend on the development of US monetary policy.
