As a seasoned financial analyst with over two decades of experience under my belt, I find myself leaning towards the notion that the US Federal Reserve will indeed start cutting interest rates in the near future, as suggested by Susan Collins, President of the US Federal Reserve Bank of Boston.
On a recent Friday, Susan Collins, President of the US Federal Reserve Bank of Boston, opined that it’s now fitting for the U.S. Federal Reserve to initiate reductions in interest rates. However, it’s worth noting that consumer price inflation (CPI) data still represents the final barrier before the anticipated Fed rate cuts become a reality.
Fed Collins Agrees On Starting Rate Cuts By US Fed
In a conversation with the Providence Journal, Boston Federal Reserve President Susan Collins indicated that the U.S. Federal Reserve might lower interest rates if the Consumer Price Index (CPI) inflation figures continue to decrease, particularly given the robust labor market conditions. The most recent weekly unemployment claims dropped beyond projections, leading to an uptick in the market.
If the current trend in data holds, I am confident that we’ll soon need to modify our policies and lessen their strictness, according to Collins. In other words, I anticipate a steady decrease in policy tightening, aiming for our 2% goal within a robust employment market.
She refused to provide more detail on the timing and extent of the Fed rate cuts, but confirmed lower interest rates in the next few years. “We’ll have more data before our September meeting, and I don’t want to get out ahead of that,” said Susan Collins.
On Wednesday, August 14, the U.S. Bureau of Labor Statistics is set to publish consumer price index (CPI) data. For three consecutive months, the U.S. has experienced a decrease in its annual CPI inflation rate, with last month’s figure reaching a low of 3%. Economists predict that this downward trend will continue, and they expect the July CPI inflation rate to be approximately 2.9%.
Lately, JPMorgan has forecasted that the Federal Reserve will reduce interest rates by 0.5 percentage points in September. Moreover, The Wallet Street’s predictions have increased the likelihood of an American recession by the year-end to 35%, a jump from 25% at the start of last month. It’s worth mentioning that the CME FedWatch tool indicates a probability of approximately 54.5% for a 0.5 percentage point rate cut in September.
Bitcoin To Rally Next Week?
According to a recent statement by Matrixport, the digital currency research firm, they believe that Bitcoin has been undervalued (oversold). They anticipate a rebound or surge (relief rally) in Bitcoin following the release of the inflation data, specifically the Producer Price Index (PPI) on Tuesday and Consumer Price Index (CPI) on Wednesday.
Bitcoin traders might show optimism if the Consumer Price Index (CPI) data is less than 3%. Matrixport has reportedly alerted its clients that trading activity and liquidity have traditionally been low during August. They further suggest that the trading environment could remain tough in the upcoming weeks. Nevertheless, there’s a high likelihood that Federal Reserve interest rate cuts will increase significantly.
Today, the value of Bitcoin (BTC) surpasses $60,000 on options expiry day, aligning with the maximum price prediction. In the last 24 hours, its price increased by over 6%, peaking at $62,673. Moreover, trading activity remains relatively low today.
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2024-08-09 17:25