Federal Reserve Governor Michelle W. Bowman recently announced that it is premature to consider a rate cut in 2024. The statement comes at a time when both traditional and cryptocurrency markets are highly sensitive. Expectations for the release of key economic data later this week further reinforce the situation.
Bowman emphasized in the statement that while the United States has made some progress in managing inflation, the inflation rate remains high and faces various risks. This position aligns with the Fed’s cautious monetary policy in an uncertain economic environment. She also stressed the importance of the Fed maintaining independence and a non-political stance in the decision-making process.
These remarks were made ahead of the second revision of the US first-quarter GDP data, which is set to be released on Thursday, May 27th. US Personal Consumption Expenditures (PCE) data is expected to be released on Friday.
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“However, with the average core consumer price inflation rate reaching 3.8% as of March this year, I expect the inflation rate to remain high for some time,” Bowman noted. She also hinted at possible deviations from global monetary policy trends.
Cryptocurrency Market Bearish Trend
The Fed’s monetary policy is exerting pressure on market conditions, including the cryptocurrency market. Higher interest rates typically strengthen the US dollar, thereby reducing the prices of assets, including cryptocurrencies. Conversely, lower interest rates usually encourage asset price increases as investors seek higher returns in riskier markets.
Bowman claims that it is unlikely for rates to be cut before 2025, indicating that borrowing costs will remain relatively high, potentially hindering investment in the cryptocurrency market. This situation could exacerbate the recent cryptocurrency crash, as investors may prefer safer and more profitable assets over volatile cryptocurrencies.
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Recently, the cryptocurrency market has been turbulent. Bitcoin (BTC) has recently fallen below $59,000 due to a large sell-off. Factors contributing to this situation include recent BTC sales and the German government’s expected payment to Mt. Gox investors worth $900 million, further worsening market sentiment. However, the lack of expected rate cuts has intensified concerns about long-term market volatility. As traditional financial conditions tighten, interest in higher-risk assets such as cryptocurrencies tends to diminish.
