Federal Reserve Governor Michelle W. Bowman recently announced that it is now too early to consider a rate cut in 2024.
The statement comes at a time when both traditional and cryptocurrency markets are highly sensitive. Expectations for key economic data to be released 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 is consistent with the Federal Reserve’s cautious monetary policy in an uncertain economic environment. She also stressed the importance of the Federal Reserve maintaining independence and a non-political stance in the decision-making process.
These remarks were made prior to the second revision of the US first-quarter GDP data, which is set to be released on Thursday, XNUMXth. US Personal Consumption Expenditures (PCE) data is expected to be published on Friday.
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Bowman pointed out, “However, given that the average core consumer price inflation rate as of 3.8 March this year was XNUMX%, I expect the inflation rate to remain high for some time.”
She also hinted at a possible deviation from global monetary policy trends.
Bearish trend in the cryptocurrency market
The Federal Reserve’s monetary policy is putting pressure on market conditions, including the cryptocurrency market. Higher interest rates typically strengthen the US dollar, thereby lowering asset prices, including cryptocurrencies. Conversely, lower interest rates usually encourage asset price increases as investors seek higher returns in riskier markets.
Bowman claims that a rate cut is unlikely before 2025, indicating that borrowing costs will remain relatively high, which could hinder investment inflows into the cryptocurrency market. This situation could exacerbate the recent cryptocurrency collapse, as investors may prefer safer and more profitable assets over unstable cryptocurrencies.
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Recently, the cryptocurrency market has been volatile.
Bitcoin (BTC)
Recently, its price fell below $59,000 due to a large amount of selling. Factors contributing to this situation include recent BTC sales, the German government’s expected payment to Mt. Gox investors worth $900 million, which further worsened 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 often weakens.
