The Fed May Continue to Raise Interest Rates, Warns Vanguard
Prior to the Federal Open Market Committee (FOMC) meeting, Vanguard, a US investment advisor, cautioned that the central bank may not be finished with raising interest rates. It suggested that the US Fed may need to maintain a restrictive monetary policy for longer than what most market participants anticipate.
Concerns over Inflation
Vanguard’s statement echoes similar sentiments expressed by Blackrock executive Rick Rieder regarding the Fed’s policy stance. Rieder warned that inflation could persist at higher levels due to factors such as larger government deficits and substantial debt levels.
Considering these concerns, Vanguard stated that the US central bank may need to raise interest rates more than expected and keep borrowing costs high until late 2024. While it is widely expected that the Fed will keep interest rates unchanged in the upcoming meeting, traders will be eager to hear about future rate decisions during Powell’s speech.
Potential Impact on Bitcoin Price
Warnings of further rate hikes by the Fed could lead to a temporary spike in Bitcoin price. After Powell’s press conference during the July 2023 FOMC meeting, both stock indices and BTC showed little volatility despite the Fed Chair’s mention of possible future rate hikes.
Hot Take: The Uncertainty of Future Rate Hikes
The possibility of the Fed continuing to raise interest rates beyond market expectations adds uncertainty to the economic landscape. This uncertainty could impact various asset classes, including cryptocurrencies like Bitcoin. Traders and investors will closely monitor any statements regarding future rate decisions during Powell’s speech for clues about potential market movements.
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