Rates Rise, Bitcoin Watches – Public speeches by central bankers are expected as the Messiah by the financial markets. Especially those of Jerome Powellpresident of the Federal Reserve US (Fed). Although the latter threatens to bad weather (and not the good weather) – with some key rates potentially higher than what the equity markets expected – Bitcoin (BTC) price and the crypto market seem unaffected (for now anyway).
An economy in palliative care? Powell’s Fed forced to hold rate hike
While the financial markets hoped that the mad hike in key rates of the American central bank calms down, Jerome Powell gave them a little cold shower. Indeed, on March 7, 2023 at 4 p.m. (French time), the President of the Federal Reserve spoke at a hearing before the US Congress.
These key rates, starting from as low as 0.25% beginning of 2022, now stand at 4.75%. And Jerome Powell just did not at all reassuring economic players, by suggesting that this painful upsurge is not over. As reported in particular by the newspaper L’Echo, the rates could even rise beyond the “maximum expected” of 5.1%.
“The most recent economic data is higher than expected, suggesting that the final level of interest rates is likely to be higher than expected. »
Jerome Powell, Chairman of the US Federal Reserve
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Bitcoin Fails to Respond to Federal Reserve Threats
A simple phrase from the Fed boss who did a little ” stumble “ equity markets. They did in fact back down slightly on the announcement of this promise of “future bad news”, shall we say. Indeed, it is not for the moment only wordsand the next rate hike will not be revealed until Wednesday, March 22, 2023.
In the meantime, it’s Consumer Price Index (CPI), in other words, the inflation rate in the United States, which will be observed very closely. Because they condition directly the Fed’s reaction. If inflation decreaseUS central bank rate hikes will calm downotherwise… Exactly, you understood: rate hike more painful than expected for the markets.
In any case, at the time of writing these lines (1 hour after Jerome Powell’s speech), the bitcoin price and the cryptocurrency market are not affected by threats of higher policy rates. There stagnation observed in recent days is continuing (for the time being).
After the massive money prints of ‘whatever it takes’ of Covid restrictions, central bankers marveled – like Christine Lagarde of the ECB – to see like this inflation “appearing out of nowhere”. But with the rise in key rates to try to combat this galloping inflation, central bankers will (again) create new problems. Indeed, in addition to generating excitement in the markets, access to creditsand their cost, already pose a problem as they stand, both for companies and for households. Especially for the home loansand especially in the United States precisely. Subprime Crisis 2.0 in: 3, 2, 1… 2008, here we are again?
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