Hike rates

US Federal Reserve set to hike rates above 400 basis points

The US Federal Reserve is tightening and rising interest rates have had a big impact on the crypto market. Earlier this month, Bloomberg analyst Mike McGlone McGlone said Bitcoin will outperform traditional stocks as interest rates rise. However, at this point, Bitcoin does not appear to be following the trend predicted by Bloomberg.

In fact, despite Bloomberg’s bullish view, Bitcoin and other cryptocurrencies are still down. For example, BTC and ETH fell 2% after the Fed announcement and rebounded. BTC is currently trading below $19,000.

Bitcoin is moving sideways below $19,000 l BTCUSDT on Tradingview.com

The Federal Open Market Committee (FOMC) of the Fed manages the economy during inflation and recession by controlling the money supply in the country. The Fed maintains the money supply through quantitative tightening and reserve easing. Therefore, a rise in interest rates causes volatility in the market.

Inflation will fall to 2% by 2025, according to the Federal Reserve

The Federal Reserve revealed its plans to fight inflation at Thursday’s FOMC. The Fed’s 75 basis point interest rate hike is just the tip of the iceberg, as it plans to raise rates as much as 400 basis points by the end of 2022.

In August, the CPI showed inflation at 8.3% year-on-year, but the Federal Reserve expects inflation to fall to 2% by 2025. The Federal Reserve expects inflation to drop to 5.4% by 2022 and 2.8% by 2023. Reports show that the Fed has raised this year’s interest benchmark by four times. Current rates are between 2.25% and 2.50%.

From CNBN Fed Survey for September, the Fed’s interest rate hike would remain at the highest rate for 11 months. John Ryding, Brean Capital’s chief economic adviser, commented in response to the survey.

Ryding said the Fed finally realized the inflation problem was critical. He thinks the rate of Fed tightening is a “positive real policy rate.” The economist advises the Fed to increase the current rate by 5%.

The survey reported that among the 35 survey respondents, some economists, strategists and fund managers believe the Fed may be over-tightening.

Recession would hit global economy – World Bank

The World Bank claims that the recession would hit the global economy due to the bellicose monetary policies of the global economy.

Svan Henrich, the founder of Northman Trader, thinks interest rates will depend on recession rather than inflation next year. He thinks Fed Reserve Chairman Jerome Powell is imitating Paul Volcker. Henrich further advised Powel to pivot before hitting the 40 basis point rate target. Paul Volcker is the former Chairman of the US Fed Reserves.

Jerome declined to say much about the recession, saying he didn’t know how deep or when the recession would occur. Meanwhile, the Fed dismissed all recession speculation.

Everyone is waiting for the release of the following inflation data in the Consumer Protection Index for September. Also, the next federal free market meeting will be on November 2.

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