Ex-US Fed President Explains Why FOMC Could Pause Rate Hike

Ex-US Fed President Explains Why FOMC Could Pause Rate Hike

Ahead of the US Federal Reserve‘s Federal Open Market Committee (FOMC) meeting, former Kansas City Fed President Esther George seconded the majority financial market participants’ view that the central bank may likely be doing away with interest rate hikes over the next few months. This comes amid widespread expectation that the Fed may maintain the current target rate at 525-550 bps.

Also Read: XRP, Solana, Cardano (ADA) Records Inflows From Institutional Investors

US Fed’s Inflation Target

The US central bank’s upcoming monetary policy decision would take into account its 2% inflation target, which is key to restore price stability in the United States economy. On September 13, 2023, CoinGape reported the consumer price index (CPI) data for August 2023. The U.S. Bureau of Labor Statistics data showed the annual inflation rate came in at 3.7% against an expectation of 3.6%. This marked a rise in inflation for the second straight month.

Speaking to CNBC, George said the US central bank’s messaging has been clear about maintaining price stability as the top priority. She said the Fed is focused on maintain price stability in the economy on a sustainable basis. However, the former Fed President warned that reaching and maintaining the inflation target could come at a cost to the US labor market. George added that the Fed could pause rate hikes to gauge the direction of the incoming data, especially in terms of the disinflation trajectory.

Bitcoin Price: The Direction

The Bitcoin price picked up strength on the upward curve just in time ahead of the FOMC meeting, around which there is high consensus about the Fed decision. However, further direction to the crypto market could be paved with investor reaction to Fed Chair Jerome Powell speech. The Powell speech could highlight whether the central bank is dovish or hawkish about future interest rate decisions.

The CME FedWatch Tool, which gauged the likelihood of Fed decision on the Federal target rate in FOMC meetings, shows a 99% confidence among traders about the rate hike pause. Hence, it is the comments around inflation targeting in Powell speech that will be closely looked at.

Also Read: NYDFS’ Proposed Framework For Crypto Listings And Delistings – WSJ

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Anvesh reports major crypto updates around U.S. regulation and market moving trends. Published over 1,200 articles so far on crypto and blockchain. A proud dropout of University of Massachusetts, Lowell. Can be reached at anvesh@coingape.com or twitter.com/BitcoinReddy or linkedin.com/in/anveshreddybtc/

The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.


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