Chairman Jerome Powell, who made a statement after the FED interest rate decision, raised expectations when he signaled that interest rate cuts might come next year.
At this point, while expectations for the FED to cut interest rates sooner are increasing, statements from FED members continue to come.
Speaking to CNBC first, FED member John Williams stated that it was too early to even consider lowering interest rates in March and signaled that interest rates could be increased if inflation does not decrease.
Another FED member, Raphael Bostic, spoke behind Williams.
Speaking to Reuters, Bostic said that the FED may start reducing interest rates in the third quarter of 2024 and stated that he expects two 25 basis point interest rate cuts during the year.
At this point, Bostic stated that he expects inflation, measured by the personal consumption expenditures (PCE) price index, to be around 2.4% by the end of 2024, which will be enough progress towards the FED's 2% target.
“I don't think interest rate cuts will happen anytime soon. We still need a few months.
In this context, there is a need to collect sufficient data and ensure confidence that inflation will continue to decline before the policy rate moves away from the current range of 5.25%-5.50%.
However, the issue of interest rate reduction can now begin to be discussed. Because I think the current inflation outlook is at a level that requires interest rate cuts. “At this point, I think we'll start talking about rate cuts in the next few weeks.”
Bostic also stated that inflation fell faster than he expected, but he said that just as they were cautious about increasing interest rates, they would also be cautious about lowering interest rates.
Stating that they want to make sure that inflation is completely under control before reducing interest rates, Bostic reiterated that he expects two 25 basis point interest rate cuts next year.
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 here may return BTC to its old days.
*This is not investment advice.