While the FED has kept interest rates constant for a long time, interest rate cut expectations in 2024 are decreasing day by day.
While expectations for the FED interest rate decision on July 31 focus on keeping interest rates constant, keeping interest rates constant is priced at 89.7%, according to CME FedWatch.
While the earliest date for the FED to start reducing interest rates is September, some experts expect a single interest rate cut for 2024, and some expect two interest rate cuts in September and December.
At this point, FED member Michelle Bowman, who has the right to vote in the FOMC, reiterated her opinion in her statement in London today that the FED's keeping the policy rate constant “for a while” would be enough to control inflation.
Making cautious statements about interest rate cuts, Bowman said that it is not yet the right time to start reducing interest rates and that they are open to increasing interest rates if inflation does not decrease.
Pointing to 2025 for interest rate cuts, Bowman said:
“If incoming economic data shows that inflation is moving sustainably towards our 2 percent target, gradual reductions in interest rates will be on the agenda to prevent monetary policy from becoming overly restrictive.
In other words, if the data meets our 2 percent target, the FED will eventually reduce interest rates.
However, given the current situation, we are not yet at the point where it is appropriate to reduce the policy rate.
“At this point, I do not see the possibility of interest rate cuts for 2024, I expect interest rate cuts to start in 2025.”
Bowman, one of the members of the FED who made hawkish statements, said that there are still some upside risks regarding inflation.
“I think interest rates should rise if inflation stops declining or starts to rise again,” Bowman said. said.
Finally, while Bowman stated that there has been modest progress in inflation so far in 2024, he said, “I expect inflation to remain high for a while. I will follow the incoming data closely while evaluating whether monetary policy in the United States is restrictive enough to reduce inflation to our 2% target over time.”
Bitcoin hit its peak of $69,000 in November 2021, when the FED started increasing interest rates. Since the subsequent bear market is directly related to the FED's interest rate increases, it is thought that a policy change and a possible interest rate cut may return BTC to its old days. Because it is expected that there will be an increase in BTC and cryptocurrencies as the FED starts to cut interest rates.
*This is not investment advice.
