Federal Reserve's Hawkish Comments and Market Reaction
Recently, the Federal Reserve announced a decision to cut interest rates; however, this rate cut did not signal a bull market as the market had expected, but rather exhibited a hawkish stance. This shift is mainly reflected in three aspects:
1. Economic Expectation Adjustment: The Federal Reserve's expectations for unemployment rates, economic growth, and core inflation are all higher than previous forecasts, indicating that the demand for rate cuts is not as strong as anticipated. 2. Dot Plot Analysis: The Federal Reserve's dot plot shows that 10 committee members predict that there will be only two or fewer rate cuts in 2025, which is clearly lower than the market's expectation of multiple rate cuts, suggesting that the Federal Reserve may maintain a relatively tight monetary policy.
3. Internal Disagreement: This rate cut was not a consensus among all committee members, as one member voted against it, indicating that there is some resistance within the Federal Reserve regarding the decision to cut rates. Additionally, Federal Reserve Chairman Powell stated in response to a reporter's question that Bitcoin is not an asset held in the Federal Reserve's reserves, which undoubtedly brought considerable negative news for Bitcoin. The market's reaction was also very direct, with the prices of Bitcoin and Ethereum plummeting in a short period of time.
