In his latest public remarks, Jerome Powell, Chairman of the Federal Reserve, clearly conveyed a hawkish signal, emphasizing that in order to ensure inflation can continue to decline to the target range, the Fed may still need to raise rates further. This statement directly shattered the market’s earlier widespread optimism that the rate-hiking cycle had completely ended.
From a macroeconomic standpoint, Powell’s remarks are intended to manage the market’s premature move toward easier financial conditions. Currently, U.S. core inflation remains sticky. Although the labor market has cooled somewhat, it still shows resilience. If tightening is stopped too early, the risk of an inflation rebound would increase manifold. Therefore, the Fed would rather bear the cost of marginal economic slowdown, but it must fully anchor inflation expectations. The threshold for any policy shift remains extremely high.
The statement rapidly rippled through traditional financial markets, lifting U.S. Treasury yields and the U.S. dollar index while suppressing the valuation-recovery potential of risk assets such as U.S. equities. Renewed tightening expectations for liquidity mean that global capital costs will remain elevated for a longer period. As a result, companies’ and investors’ appetite for borrowing and expansion will face further pressure.
For the cryptocurrency market, the extension of tightening expectations is a direct negative. Without any substantive improvement in macro liquidity, risk assets led by $BTC are unlikely to break out of a sustained bull market. Instead, they are more likely to experience liquidity withdrawal and a deep pullback due to high interest rates and rising risk-off sentiment. Investors at this stage should remain highly cautious and watch for false breakouts and downside volatility risks.
#Fed #InterestRates #MacroEconomy
From a macroeconomic standpoint, Powell’s remarks are intended to manage the market’s premature move toward easier financial conditions. Currently, U.S. core inflation remains sticky. Although the labor market has cooled somewhat, it still shows resilience. If tightening is stopped too early, the risk of an inflation rebound would increase manifold. Therefore, the Fed would rather bear the cost of marginal economic slowdown, but it must fully anchor inflation expectations. The threshold for any policy shift remains extremely high.
The statement rapidly rippled through traditional financial markets, lifting U.S. Treasury yields and the U.S. dollar index while suppressing the valuation-recovery potential of risk assets such as U.S. equities. Renewed tightening expectations for liquidity mean that global capital costs will remain elevated for a longer period. As a result, companies’ and investors’ appetite for borrowing and expansion will face further pressure.
For the cryptocurrency market, the extension of tightening expectations is a direct negative. Without any substantive improvement in macro liquidity, risk assets led by $BTC are unlikely to break out of a sustained bull market. Instead, they are more likely to experience liquidity withdrawal and a deep pullback due to high interest rates and rising risk-off sentiment. Investors at this stage should remain highly cautious and watch for false breakouts and downside volatility risks.
#Fed #InterestRates #MacroEconomy