As a seasoned crypto investor with a keen interest in economic policy, I find myself in an unusual position of agreeing with Senator Elizabeth Warren on this occasion. I’ve weathered her relentless attempts to regulate and legislate our industry, but her recent call for the Federal Reserve to lower interest rates is an alignment that’s hard to ignore.
I’m currently observing that US Senator Elizabeth Warren (D-MA) is advocating for the Federal Reserve to reduce its interest rate benchmark imminently. Many experts in the crypto sector anticipate that this move would positively impact the digital currency markets.
The senator’s latest appeal finds her in an unexpected alliance with cryptocurrency investors, a group she has persistently sought to restrict through heavy-handed laws and extensive reporting obligations.
Cut Interest Rates Now, Says Senator Warren
In a letter to Jerome Powell, the Fed chairman, penned on Tuesday, Senator Warren expressed her concern that the Federal Reserve’s present interest rate of 5.5% is not only decelerating the economy but also paradoxically worsening inflation, which has persistently hovered above the 3% mark for an extended period.
The letter, which is co-signed by Senators Warren and Rosen (D-NV), points to a May 31 report from Bankcreek Capital Advisors. According to the text, rising housing and auto insurance costs are significantly contributing to the current inflation rate. By decreasing these rates, the cost of renting, purchasing, or constructing housing would decrease as well, thereby lessening Americans’ largest monthly expense.
As a researcher, I would express it this way: The US could align its monetary policy with that of Canada and the EU by lowering interest rates, following their recent moves in this direction after years of stability. Notably, Sweden, Switzerland, Hungary, and the Czech Republic have already taken similar steps.
To summarize, the senators argued that the Federal Reserve’s present monetary policy could potentially lead to an economic recession, resulting in job losses for thousands of workers.
“You have kept interest rates too high for too long. It is time to cut rates,” the letter stated.
The Odds Of A Rate Hike
The Federal Reserve is set to announce its next interest rate move on Tuesday, coming after the release of the Consumer Price Index data for May in the morning. So far, the Fed has signaled that rates will remain elevated for an extended period.
The Committee believes it may not be the right time to lower the target range until they have more certainty that inflation is consistently heading towards a 2% level. (Paraphrased)
The report additionally stated that both job creation and unemployment levels have remained relatively stable, possibly implying the potential for an increase in unemployment or jobless rate.
Based on the latest data from CME FedWatch, there is a 99% probability that the Federal Reserve will maintain current interest rates during its upcoming June meeting. However, there is a higher chance of a rate reduction starting as early as September or November.
As a researcher studying the cryptocurrency market, I’ve noticed that some investors are convinced that Bitcoin‘s price will rise due to anticipated lower interest rates. Last week, Arthur Hayes of BitMEX made this argument and suggested buying Bitcoin first, followed by other cryptocurrencies, or “shitcoins.” This recommendation came in response to several central banks adjusting their monetary policies.
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2024-06-11 23:19