uring yesterday’s FOMC meeting, Jerome Powell hinted that there could be a possible rate cut during the next meeting if the current inflation trend persists. This was said at a time when the economic data pointed towards a slight increase of unemployment to 4%, while inflation rates have declined.
Effects on Bitcoin and the Stock Exchange
Although Bitcoin’s price was volatile ahead and after the FOMC meeting, it has generally remained under control, Currently trading at $65,000 dollars. On the other hand, the stock market has performed and reacted a Lot more positively than Bitcoin after the dovish tone from Jerome Powell
Information specifics on the economic data
An important economic data to take into consideration and that could affect the possibility of a rate cut is the PCE, personal consumption expenditures index which recorded a 2,5% year over year as of June. Moreover, upcoming economic reports on the non farm payroll should be monitored closely as it will provide insights on the strength of the labor market and in turn impact the next policy rate decision
Federal Reserve’s Stance on Digital Currency
Jerome Powell also discussed the issue related to CBDC and reassured the public that the FED currently has no plans to issue a CBDC nor it is waiting for an approval from Congress. Moreover, it seems like Powell is taking into consideration the impact digital finance technologies could have on the financial system
A Cautious yet Adaptive Approach
The monetary policy highlighted by the FED largely withholds any interest rate changes while taking into consideration economic progress. As the possibility of rate cuts seems to be in the near future, markets and cryptocurrencies, including Bitcoin, will continue to react to these changes and indicators hence why we are experiencing high volatility in markets.
