In an interview on Tuesday, Federal Reserve Governor Christopher Waller essentially gave a foretaste of the Federal Open Market Committee’s (FOMC) decision on a rate hike. He said recent economic data may give the Fed some leeway to be cautious in setting target rate changes.
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No short-term rate cuts?
Waller’s comments come after Fed Chair Jerome Powell warned during his Jackson Hole speech that the Federal Reserve is ready to raise interest rates if it deems it appropriate. Additionally, Patrick Harker, President of the Federal Reserve Bank of Philadelphia, said he doubts the possibility of rate cuts until sometime in 2024. In an interview with CNBC, he stated:
“Recent economic news will allow us to proceed cautiously. There’s no indication that we need to do anything any time soon, so we can just sit there and wait for the data and see if things continue on their current path.”
The Fed Governor’s comments followed a decline in Bitcoin’s price, while the S&P 500 Index also saw a slight decline at market open.
Economic Uncertainty in US; Will it favor bitcoin?
The upcoming September 19-20, 2023 FOMC meeting could likely set the tone for the remaining meetings in the current calendar year. Therefore, BTC’s price reaction to the upcoming rate decision could have a lasting effect, considering Waller’s statement that the data would allow Fed officials to make decisions carefully while keeping an eye on the unemployment rate and inflation numbers .
It could also mean that Fed officials would stick with maintaining the current target rate. The CME FedWatch tool currently suggests that respondents are 95% confident that there will be no rate hike at the forthcoming meeting.
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