Fed Rate Cut: Lorie Logan Calls For Lower Rates If This Happens

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As a seasoned researcher with extensive experience in tracking global financial markets and central banking policies, I find myself closely watching the developments at the Federal Reserve Bank of Dallas, particularly Lorie Logan’s comments. Her repeated calls for gradual rate cuts reflect a cautious approach that is not uncommon among central bankers during times of economic uncertainty.

Once more, Lorie Logan, President of the Federal Reserve Bank of Dallas, advocated for a steady reduction in interest rates, emphasizing the economic uncertainties presently at hand.

As a researcher, I find it encouraging when the economy is progressing, and a gradual decrease in policy rates appears to be not only acceptable but also beneficial for reaching our objectives. Reducing rates towards a neutral level might facilitate our goals’ attainment. However, I must emphasize that unexpected economic disturbances such as inflation or unemployment can influence this rate of change.

The possibility of interest rate reductions by the Fed tends to boost anticipation towards cryptocurrencies like Bitcoin, as historically, lower interest rates make riskier assets such as these more appealing. This is because when interest rates decrease, investments appear cheaper due to abundant debt and liquidity, leading investors to seek higher returns.

Fed’s Lorie Logan: Gradual Rate Cuts Coming

Consequently, Lorie Logan emphasized once more her proposal for a slow reduction in interest rates by the Fed, due to the ambiguity surrounding the current economic forecast. These reductions could potentially boost prices further since conventional returns are becoming progressively less enticing. As a result, investors are being compelled towards alternative investments such as Bitcoin.

Currently, the markets seem to have factored in any anticipated interest rate reductions. Financial experts believe that these monetary adjustments might prolong the desire for cryptocurrencies. Furthermore, they suggest that such policy changes could bolster Bitcoin’s role as a protective asset against fiat currency depreciation.

At the yearly gathering of the Securities Industry and Financial Markets Association, Lorie Logan proposed that a more flexible monetary approach could strike a balance between the potential hazards related to the Federal Reserve’s twin objectives of managing inflation and unemployment.

As a researcher, I would articulate Lorie Logan’s insights in this manner: “In my analysis, gradual policy-rate decreases leading toward a neutral level could be instrumental in attaining the Federal Reserve’s objectives if the economy experiences sustained growth. Yet, it is crucial to bear in mind that various economic shocks can influence both the speed and destination of such normalization. Consequently, the central bank’s course of action might need to adapt as the economic landscape evolves.

Economic Shocks Could Alter Rate Cut Path

In a different context, Lorie Logan emphasized the importance of adaptability, stating that “the Federal Open Market Committee (FOMC) should be ready to modify their policies depending on the situation that arises.

Lorie Logan’s extensive background, particularly her role in overseeing the Federal Reserve’s System Open Market Account (SOMA), has provided a clear picture of the central bank’s financial landscape and funding market concerns. This experience also suggests that economic forecasts may need to adapt as risk factors evolve.

For the first time during the pandemic, the Federal Reserve lowered interest rates by half a percentage point in their most recent meeting. They also adjusted the new range to 4.75%-5%. This action was taken due to worries about a softening job market and inflation moving closer to their desired level of 2%.

In contrast to indications of an economic deceleration, the latest job market statistics revealing robust hiring over the last quarter have led investors to believe that the Federal Reserve will implement a modest reduction of just one-quarter percentage point during their meeting on November 6-7.

Nevertheless, Logan cautioned that various economic upheavals could potentially modify the speed and ultimate destination in the normalization process. This serves as an early indication that the central bank may need to adjust its approach moving forward due to shifting economic circumstances.

On the other hand, not all individuals are convinced that the Federal Reserve will reduce rates so quickly. As Torsten Slok, the chief economist at Apollo Global Management, stated, the probability of the Federal Reserve choosing not to increase rates in November increases with each robust economic data point from the United States.

APOLLO’S SLOK SEES RISING CHANCE FED WILL HOLD RATES IN NOVEMBER

According to Tortsten Slok, the top economist at Apollo Global Management, it’s becoming increasingly likely that the Federal Reserve will keep interest rates steady in November, given the strong momentum of the American economy. The prices of financial instruments (swaps) indicate a minimal quarter-point adjustment by the Fed.

— *Walter Bloomberg (@DeItaone) October 21, 2024

Financial markets share this view as well. The cost of swaps indicates a minimal change below 0.25% in the upcoming interest rate for the next month, suggesting that investors are beginning to believe the Federal Reserve might adopt a more measured approach due to the evolving economic landscape.

Bitcoin’s Future: Key Rate Cut Ahead of Election

Bitcoin has resumed its climb following the trajectory seen prior to halving, since the Federal Reserve lowered interest rates in September. This surge might be due to investors growing more willing to take on risk, a trend that is not solely related to the interest rate cut but also reflects similar strategies being considered by many banks worldwide.

Matt Hougan, the CEO of Bitwise Investments, has shown optimism towards Bitcoin, suggesting a potential surge in its price that could reach levels exceeding six figures. This sentiment mirrors the increasing institutional trust in digital currencies, especially as the influx into Bitcoin-related ETFs suggests a changing market landscape that might propel prices to unprecedented heights.

As the months progress, November is becoming more significant for Bitcoin enthusiasts. Recent surveys suggest that the Federal Reserve might reduce interest rates by 0.25%, taking the current rate down from 4.75% to 4.5%. This move, experts believe, would be a suitable action to counteract moderating inflation and a sluggish labor market in the U.S.

Initially, there was anticipation for a reduction of 0.5% in interest rates. However, the more modest adjustment is being attributed to inflation nearing the central bank’s 2% goal. It is expected that the FOMC will validate this rate cut during their meeting on November 6-7. Interestingly, this decision is set to occur exactly one day before the eagerly awaited US Presidential Election. Collectively, these events could significantly impact Bitcoin’s future trajectory.

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2024-10-21 19:22