The latest non-farm payroll report indicates that the US Federal Reserve (Fed) may delay interest rate cuts until the end of 2025.
Positive job data with a declining unemployment rate and a decrease in initial unemployment claims have ruled out the possibility of the Fed lowering interest rates in the near future, according to strategist Seema Shah of Principal Asset Management.
MAIN CONTENT
July job data exceeded expectations, and the unemployment rate decreased.
The Fed will not cut interest rates before 2025, according to expert predictions.
Fed spokespeople who previously forecasted early rate cuts have changed their views.
How does non-farm payroll data impact the Fed's interest rate policy?
Seema Shah, a strategist at Principal Asset Management, asserts that the newly released job data indicates the Fed will not lower interest rates anytime soon. Strong job growth and a declining unemployment rate have removed the reasons for the Fed to quickly adjust monetary policy.
The non-farm payroll data for July showed an increase exceeding expectations, along with a decline in initial unemployment claims, demonstrating the health of the labor market and reducing pressure on the Fed to support the economy by lowering interest rates.
"Job growth exceeding expectations and the unemployment rate dropping to a low completely eliminates the possibility of the Fed cutting rates in the short term, indicating that the central bank is not in a hurry to implement support policies."
Seema Shah, Principal Asset Management Strategist, 03/07/2024
Why do some Fed spokespeople lean towards the possibility of early rate cuts?
Ahead of the latest report, some Fed spokespeople indicated they might consider cutting interest rates as soon as this month to stimulate economic growth. However, after stronger-than-expected job figures were released, this viewpoint changed.
The Fed's monetary policy is always based on actual economic data. When the data shows a stable labor market with no signs of weakening, the pressure to cut interest rates immediately decreases, contributing to maintaining the current interest rate or only adjusting it slowly.
How could maintaining the current interest rate affect the US economy and the cryptocurrency market?
Analyses from reputable financial reports indicate that the Fed's delay in cutting interest rates will help control inflation but may hinder economic growth in the short term. In the cryptocurrency market, this trend often leads to price volatility due to the impacts of borrowing costs and investment capital flows.
According to the CEO of a large cryptocurrency investment fund in the US, the Fed's prolonged tight policy is likely to make market participants consider risks more carefully, while also driving demand for more innovative investment solutions like DeFi or staking.
"Tight interest rate policies, while slowing growth, are necessary to maintain the long-term economy and instill confidence in strategic investors."
John Miller, CEO of Digital Assets Fund, 06/2024
How can investors respond to the expected prolonged interest rate policy?
Financial experts recommend that investors diversify their portfolios, focus on highly stable assets and strong technology, while closely monitoring economic data to timely adjust strategies.
Moreover, leveraging DeFi solutions or staking on blockchain platforms will help optimize returns during a period of stable interest rates, minimizing the risk of volatility in the cryptocurrency market.
Frequently asked questions
Can the Fed cut interest rates before 2025?
Experts predict that the Fed will not lower interest rates before the end of 2025 based on job data and official statements.What is the main reason the Fed keeps interest rates high?
A strong labor market and a declining unemployment rate are the main reasons for the Fed to continue tightening monetary policy.How does this policy affect the cryptocurrency market?
High interest rates can increase borrowing costs, create price volatility, and drive demand for more decentralized and innovative investment solutions.What should investors do when the Fed maintains this policy?
Diversify the portfolio, focus on quality assets, and leverage staking and DeFi services to optimize returns in a high-interest rate environment.How long will this policy last?
Based on current forecasts, the Fed will keep interest rates stable or gradually increase them until the end of 2025, depending on upcoming economic data.
Source: https://tintucbitcoin.com/fed-giu-lai-suat-den-2025-tac-dong-tien-so/
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