Today, while Bitcoin and global markets were waiting for the FED to announce the first interest rate decision of 2024, a report came from JP Morgan analysts.
Analysts stated that at this point, critical data do not yet show a meaningful inflation decrease, and said that the markets seem overly optimistic about the FED's interest rate cuts.
Analysts, who cited the fact that inflation will decline in 2023 and the FED signaled that it will cut interest rates at its December meeting as the reason for this, stated that the FED remains determined to fight inflation and is ready to increase interest rates again if necessary.
In a note titled “Macro Strategies Outlook,” the JPMorgan macro strategy team led by Shrenick Shah wrote:
“Critical inflation data closely followed by the FED have not yet shown signs of a significant decline in inflation.
At this point, even if inflation declines in 2023 and the FED signals that it will reduce interest rates at its December meeting, the market paints an overly optimistic picture about interest rate cuts.
In our view, the market may be overly optimistic as we see limited evidence of falling inflation in certain areas that are the Fed's focus, particularly core services inflation and wage data.
Moreover, the continued resilience of US growth may hinder the disinflation process and even create upward pressure.
“We also believe that the FED will remain determined to fight inflation and will not hesitate to take action if inflation rises again.”
Bitcoin has historically moved more or less in line with stocks, falling in the wake of the Fed's hawkish actions. However, it started to increase as the FED softened its hawkish stance and adopted a more dovish stance.
At this point, analysts added that BTC's 57% increase in the fourth quarter of 2023 was partly due to increasing interest rate cut expectations and weakness in the US dollar index.
*This is not investment advice.