According to Cointelegraph, Kevin Hassett, director of the National Economic Council, has been engaging in regular discussions with Federal Reserve Chairman Jerome Powell. These meetings, as clarified by Hassett during an appearance on CBS' Face The Nation, are not intended to influence interest rates. He emphasized the independence of the Federal Reserve while noting that U.S. President Donald Trump's opinions are also considered, given his position. Hassett highlighted a reduction in long-term rates since the Trump administration began, pointing to a 40 basis point decrease in 10-year Treasury rates as an indication of market confidence in declining inflation.
Lower interest rates are generally seen as favorable for cryptocurrencies and other risk-on assets, as they facilitate access to cheaper credit, encouraging investments. However, Federal Reserve Chairman Jerome Powell, in his testimony before the Senate Banking Committee on February 11, 2025, indicated that the central bank is not in a rush to adjust interest rates, casting doubt on potential rate cuts this year. This stance comes amid the release of the U.S. Bureau of Labor Statistics' January 2024 Consumer Price Index report, which revealed higher-than-expected inflation figures, with annual inflation reaching 3% in January 2025. This unexpected rise has led to a decline in Bitcoin prices, falling below $95,000, as investors brace for a high interest rate environment.
The persistent inflation, coupled with macroeconomic risks such as a looming trade war, has made investors wary of risk-on assets like cryptocurrencies. The Chicago Mercantile Exchange's FedWatch tool reflects this sentiment, showing that only 3% of market participants anticipate a 25 basis point rate cut at the Federal Reserve's upcoming March 2025 meeting. This cautious outlook underscores the challenges faced by the Federal Reserve in balancing economic growth with inflation control.