With the latest statements from Federal Reserve Chair Jerome Powell and the decision to maintain interest rates at 4.25% - 4.50%, the economic situation in the US and the impact of monetary policy are becoming a hot topic among analysts. Statements regarding inflation, unemployment, and the impact of unrelenting tariffs are creating significant pressures on financial markets, including the crypto market. In this article, we will analyze in detail the data and market trend forecasts based on the Fed's statements and decisions.
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1. Interest Rates Remain High
The US Federal Reserve (Fed) has decided to maintain interest rates at 4.25% - 4.50%. This is quite a high interest rate and reflects the Fed's goal of curbing inflation, but it also poses greater challenges for the economy. High interest rates have a strong impact on borrowing costs, reducing consumer spending and business investment. This will affect financial markets, including the crypto market.
• Impact on the crypto market: Risky assets such as Bitcoin and other cryptocurrencies are often closely linked to interest rates. When interest rates are high, borrowing costs are also high, leading many investors to seek less risky assets such as government bonds or blue-chip stocks. Therefore, the crypto market may face sell-offs in this context.
2. Higher Inflation and Unemployment
Fed Chair Jerome Powell also noted that risks of higher unemployment and higher inflation are increasing. This is a worrying signal about instability in the economy. If unemployment rises and inflation does not decrease quickly enough, consumer purchasing power will decline, also slowing down economic growth.
• Impact on the economy and crypto: When unemployment rises, consumer spending decreases, leading to a decline in economic activity. Businesses will find it harder to maintain production and pay wages to employees, which can lead to an economic recession. The crypto market may also be affected by price declines as investors return to safe assets and avoid risks.
3. Inflation Has Decreased Significantly
While the Fed Chair noted that inflation has decreased significantly, he also warned that reducing tariffs will be a crucial factor in continuing to reduce inflation and avoiding negative impacts on the economy. The fact is, although inflation has decreased from peak levels, it is still not fully under control. External factors such as commodity prices, shipping costs, and tariffs can still put pressure on prices, prolonging high inflation.
• Impact on the crypto market: Decreasing inflation could be good news for the crypto market, as it reduces pressure on digital assets that are often seen as hedges against inflation. However, if tariffs do not decrease and other economic issues continue to disrupt, inflation may rise again, negatively affecting the value of Bitcoin and other cryptocurrencies.
4. The Impact of Tariffs Has Not Decreased
One of Powell's critical warnings is that if tariffs are not reduced, it could lead to rising inflation, slowing economic growth, and increased unemployment. High tariffs can increase production and consumption costs, continuing to create uncertainties in the economy. Especially, in the context of the global economy facing difficulties, tariff policies may become a pressure factor on the US economy.
• Impact on the crypto market: When inflation and costs rise, people and investors may seek alternative assets like crypto to protect their wealth from the depreciation of the USD. However, if tariffs do not decrease and the economy remains in a difficult state, the crypto market may continue to face strong volatility and short-term price risks.
5. The US Economy is 'Strong'
Despite many unstable factors, Jerome Powell stated that the current US economy is still considered 'strong' and 'performing quite well'. This implies that the US economy could overcome current challenges if factors such as tariffs and monetary policy are properly adjusted.
• Impact on the crypto market: If the US economy maintains stability, there may be a slight recovery in risky assets like crypto. However, attention must still be paid to external instability factors, such as trade conditions and political uncertainties that could strongly impact the crypto market.
6. Developments This Year
Finally, Powell warns that the US economy will not achieve growth targets this year unless tariffs are reduced. This means that the stagnation of the economy will continue, and current policies may continue to affect investor sentiment, leading them to seek less risky assets.
• Impact on the crypto market: If stagnation persists and the economy does not show clear signs of recovery, the crypto market will struggle to maintain upward momentum. Investors will be more cautious and may choose to reduce their investment exposure to crypto, leading to a decline in the value of cryptocurrencies.
Conclusion:
Recent statements and decisions from the Fed indicate an unstable economic picture for the US. High interest rates, uncertainty regarding tariffs, and warnings about unemployment and inflation could lead to economic difficulties in the near future. This will put strong pressure on the crypto market, causing digital assets to face potential price corrections in the short term.
However, if the US economy remains stable, and if tariffs are reduced, the crypto market may recover and continue to serve as a hedge against inflation. Crypto investors need to closely monitor changes in Fed policy and macroeconomic factors to develop appropriate investment strategies in the near term.