The Chairman of the U.S. Federal Reserve (Fed), Jerome Powell, has just issued a cautious message about the roadmap for cooling inflation to the 2% target. He emphasized that supply-side shocks are occurring more frequently and lasting longer, and the Fed cannot simply ignore them. To control the situation, the agency must maintain measures that could create painful pressure on the economy.
This message has thrown a bucket of cold water on expectations of a flawless soft landing that the market once hoped for. The Fed chair’s acknowledgement of the harsh trade-off between protecting jobs and restraining inflation suggests that interest rates are likely to stay at a high level for longer than expected, as disruptions in the global supply chain have not yet fully ended.
For traditional financial markets, this firm stance is strengthening the U.S. dollar and keeping U.S. Treasury yields in elevated territory. Rising costs of capital continue to cast a shadow over the stock market, reducing the risk appetite of major investment funds in the near term.
The crypto market, especially $BTC , will face a prolonged period of tightening liquidity. When cheap money cannot return soon, highly speculative assets are prone to fall into phases of accumulating choppy fluctuations, forcing investors to be patient and monitor the next macroeconomic data releases before expecting a strong breakout.
#Fed #Inflation #MacroEconomy
This message has thrown a bucket of cold water on expectations of a flawless soft landing that the market once hoped for. The Fed chair’s acknowledgement of the harsh trade-off between protecting jobs and restraining inflation suggests that interest rates are likely to stay at a high level for longer than expected, as disruptions in the global supply chain have not yet fully ended.
For traditional financial markets, this firm stance is strengthening the U.S. dollar and keeping U.S. Treasury yields in elevated territory. Rising costs of capital continue to cast a shadow over the stock market, reducing the risk appetite of major investment funds in the near term.
The crypto market, especially $BTC , will face a prolonged period of tightening liquidity. When cheap money cannot return soon, highly speculative assets are prone to fall into phases of accumulating choppy fluctuations, forcing investors to be patient and monitor the next macroeconomic data releases before expecting a strong breakout.
#Fed #Inflation #MacroEconomy