Fed member Goolsbee made statements on the future of interest rate cuts. Stating that 25 or 50 basis point cuts are not enough to reach a neutral level, Goolsbee emphasized that a more comprehensive reduction process is needed over the next 12 months.
The cryptocurrency Bitcoin rose to $60,700 at the time of writing. However, as we approach 2025, a difficult period for crypto investors began with the Fed’s rapid interest rate hikes. These hikes caused major fluctuations in risk markets. The Fed, which postponed interest rate cuts in order to sustain the fight against inflation, subsequently caused problems on the employment side.
Fed Statements
Goolsbee, in his statements on interest rate cuts and inflation, stated that the decline in inflation in risk markets, including cryptocurrencies, should continue. In this context, he stated that the Fed should switch to a period of monetary expansion by lowering interest rates. He noted that with the decrease in inflation, the Fed has started to lower interest rates. However, PMI data shows that some economic areas are shrinking and recent corporate bankruptcies increase recession concerns. For this reason, it is thought that the Fed should continue to reduce interest rates rapidly. This situation may cause the value of cryptocurrencies to increase.
Goolsbee said:
“The main issue we need to discuss is not 25 basis points or 50 basis points of cuts. We need to cut for 12 months to get to neutral. The new inflation data shows the Fed is moving toward its goal. Employment is good.”
Goolsbee also noted that the dockworkers' strike was anticipated, and retailers were stockpiling supplies and had about two weeks' worth of supplies, stressing that this situation would have a greater impact in the future.