While Bitcoin (BTC) investors are getting optimistic with inflation and Fed interest rates falling, leading economists are making critical warnings.
The former FED Chairman, Warned!
Yesterday’s Federal Reserve (FED) FOMC meeting turned out to be more hawkish than many Bitcoin investors and financial markets expected. The FED raised interest rates by 0.5 percentage points on Wednesday, as expected. Experts say that the Fed could raise the interest rate to 5.1% in 2023 before cutting it to 4.1% in 2024. Fed Chairman Jerome Powell explained that “More important than the pace is how much higher interest rates will eventually have to rise and how long we will stay at this level.
” As a result, economists are expressing concern about persistent inflation. At yesterday’s FOMC press conference, the Fed chairman proved to be extremely hawkish. At least he tried to emphasize this again and again. While investors hope that interest rates will rise less next year, Powell’s statements again left a question mark in their minds.
Experts are worried that the Fed could trigger a dangerous recession process in the United States with its monetary policy. However, Powell stressed that the FED is “committed” to bringing the inflation rate back to its target of 2%. However, there is still a long way to go for this to happen. In addition, the FED chairman explained that there are still difficulties in combating inflation. According to some analysts, the reason why the Bitcoin price lost momentum after Powell’s statements yesterday may also be due to the fact that the market does not believe Powell’s words. The Fed’s hawkish policies increase the risk of moving the economy into recession. Former FED chairman Frederick Mishkin noted that in this case, “political pressure on Powell will increase.” Mishkin pointed out that it would be especially risky to raise interest rates further when the economy is already in bad shape.
‘There’s Still a Lot of Work To Do’
Analyst Jeffrey Gundlach of the investment firm Double Line Capital said in an online event on Monday that he expects a recession in the first half of 2023, when the Fed will “cut interest rates again.” According to the expert, Central Banks are currently telling a different story. While priority is given to Decelerating inflation, the risk of recession is ignored. According to Lisa Abramowicz of Bloomberg Surveillance, the Fed is still taking a hawkish stance. The Fed still has a lot of work to do.
Tom McClellan of ”The McClellan Market Report” wrote on Twitter that the Fed’s rate hike cycles usually end when the interest rate reaches the level reached by 2-year government bond yields. The expert wrote that the Fed should stop, but according to the post-meeting announcement, there is no indication that they know this. As a result, it is too early for a concrete bull run in Bitcoin. The Bitcoin price has seen a strong rise ahead of the FOMC meeting, but despite Powell’s hawkish stance, BTC is doing very well despite. Bitcoin was rejected at the level of $ 18,220. According to experts, the consolidation process in BTC is likely to continue. The support levels that need to be held are between Dec 17,200 and DEC17,400. BTC is currently trading at $ 17,581.
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