The most important event of this week for Bitcoin, cryptocurrencies and global markets will be the Jackson Hole meeting.
The meeting, held every year in Jackson Hole, Wyoming, USA, is closely followed by the banking industry.
The meeting, attended by representatives of central banks from developed and developing countries around the world, will be held between August 22-24 this year.
The theme of this year's Jackson Hole meeting will be 'Reassessing the Effectiveness and Transmission of Monetary Policy.'
All Eyes Will Be on the FED Chairman's Speech!
Following the selling pressure and recession talk in money markets at the beginning of this month, statements from FED Chairman Jerome Powell will be followed with great attention.
It is expected that the FED Chairman will make statements on interest rate cuts in his speech on August 23 at the Jackson Hole meeting, which is considered the “Davo of world central bankers”, and that the subject and rate of the interest rate cut will be clarified.
The most important question to be answered at this year's Jackson Hole will be how much the Fed will cut interest rates in September.
At this point, Powell is expected to indicate that interest rates will be cut starting in September and to emphasize that the reductions will be “orderly.”
Powell is also expected to ease expectations of a 50 basis point rate cut in September, while strengthening the case for 25 basis points.
UBS economists said the following about Powell's interest rate statements:
“We expect Chairman Powell to make a case for an orderly withdrawal of monetary policy restrictiveness in his speech in Jackson Hole on Friday morning, August 23. By orderly, we mean a 25 basis point rate cut rather than a 50 basis point cut.
At this point, we expect three 25 basis point rate cuts in 2024, at the September, November and December FOMC meetings. Powell said last month that if inflation and the labor market continue to cool, a rate cut could be on the agenda at the Fed's next meeting.”
Will Powell Signal a 50 Basis Point Cut?
Powell is likely to signal that cutting interest rates is “appropriate” soon, according to Bloomberg Economics analysts.
Economists including Anna Wong say the market will focus on one question: “Will Powell signal openness to a 50 basis point cut or not?”
“We don't think Powell will close the door to a 50 basis point cut, but he won't give a specific signal that he could cut 50 basis points either, because policymakers haven't yet reached a consensus on the urgency of cutting rates,” economists said in response to the question.
Inflation Dropped!
When Powell spoke at the Jackson Hole meeting last year, Bitcoin was trading at $26,000, while inflation in the US was 3.2% and interest rates were at 5.5%.
Before this year's Jackson Hole meeting, Bitcoin was hovering around $58,000, while inflation in the US was at 2.9% and interest rates were at 5.5%.
What Did Powell Say Last Year?
Powell made the following statement at last year's meeting:
- We are prepared to raise interest rates further if appropriate.
- We intend to keep interest rates at a restrictive level until we are confident that inflation has fallen to a sustainable 2%.
- Two months of good data is just the beginning of what we need to build confidence in the inflation path.
- Policy is restrictive, but the Fed cannot be certain of what the neutral interest rate level is.
- The Fed recognizes that monetary policy faces risks on both sides.
- Inflation data is more positive, but there is a long way to go.
- Our inflation target is still at two percent and will remain so.
*This is not investment advice.