Discussion is brewing in various financial arenas, notably the cryptocurrency industry, following a recent remark from a Federal Reserve representative.
Based on the latest comments from St. Louis Fed President Alberto Musalem, it appears the central bank might delay any immediate reduction in interest rates due to worries about rising inflation. As reported by the Wall Street Journal, this Fed official hinted that additional rate reductions may be postponed for now.
The Federal Reserve reduced its interest rates, and as a result, longer-term yields increased. St. Louis Fed President Alberto Musalem shared his perspective on the current situation. Musalem believes that financial conditions continue to foster economic growth.
More information can be found here:
Longer-term interest rates have risen…
— Nick Timiraos (@NickTimiraos) January 10, 2025
According to Musalem, the likelihood of inflation staying within the range of 2.5% to 3% has become more probable by December’s meeting. This leads him to suggest that it may be prudent to exercise more care before implementing any additional reductions.
As an analyst, I initially endorsed Musalem’s stance on the Federal Reserve’s move to commence rate reductions with a more aggressive 0.5 percentage point decrease in September. However, moving forward, it appears that any subsequent rate adjustments need to be implemented gradually, and even more slowly than my initial thoughts suggested in September.
At their upcoming gathering on January 28-29, Federal Reserve officials have suggested they will likely maintain current interest rates, as they express apprehension regarding inflation and intend to proceed with caution when it comes to reducing rates in 2025. The minutes of the December meeting, published on Wednesday, highlighted these points.
In anticipation of the Federal Reserve’s meeting scheduled for late January, crypto enthusiasts are keeping a keen eye on any possible effects this could have on Bitcoin, Ethereum, and various other digital currencies.
Crypto market braces for impact
During the early trading hours on Friday, the cryptocurrency market showed signs of recovery as Bitcoin climbed up to $95,283. Earlier in Wednesday, prices had probed the established support range of around $90,000-$93,000. This particular zone has effectively halted any negative price trends at least six times since late November.
Among the top ten cryptocurrencies, Cardano‘s ADA showed a notable improvement, increasing by approximately 5% over the past 24 hours. Solana’s SOL, BNB Chain’s BNB, and Ethereum (ETH) also experienced growth, up to 1%. Shiba Inu and Stellar (XLM) saw even more significant gains, with increases exceeding 3%, while SUI registered a substantial rise of up to 8%.
Investors eagerly await the publication of today’s December nonfarm payrolls figures. This report serves as a significant barometer for the overall economy and is one of the crucial pieces of information released before the Federal Reserve’s meeting at the end of January. The data from this report could influence the Federal Reserve’s decisions regarding interest rates.
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2025-01-10 18:34