Cryptocurrencies rise before the Fed rate hike

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The Federal Reserve is expected to announce a 0.75% hike in short-term interest rates on Wednesday this week.

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Busy week for economic data with 170 companies reporting second quarter results; The Fed is likely to raise interest rates to calm inflation; and we should know if the US is headed for a recession when productivity data comes out Thursday.

Investors appear to be ditching risky investments like cryptocurrencies as the overall cryptocurrency market is down 4.5%, according to CoinMarketCap, and the top 20 cryptocurrencies have fallen in the past 24 hours.

As of press time, the overall cryptocurrency market rating has dropped more than 4.5%, while the top 20 cryptocurrencies have been in the red in the past 24 hours, according to CoinMarketCap. The largest and most popular cryptocurrency, Bitcoin, lagged behind, even trading between 4% and 5% as the US stock market was slightly volatile, reports Yahoo!

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The Fed’s current actions may not be enough

Last month, annual inflation hit a new 40-year high, marking 13 consecutive months above 5% inflation. These figures prompted the Fed to announce a 0.75% increase in short-term interest rates in June to calm inflation. At the same June meeting, Fed Chairman Jerome Powell hinted at the possibility of another 0.75% rate hike at the July central bank meeting next Tuesday and Wednesday.

If the Fed raises interest rates by 0.75%, the cost of borrowing would go from 2.25% to 2.50%, but it is unclear whether this will be enough to stem the rise in inflation, given that the June figure rose to 9.1%. . In fact, former Fed Chairman Ben Bernanke recently criticized the current Fed leadership, saying it should have reacted last year when inflation started to rise in April 2021. We’ll see what happens on Wednesday, but the current plan seems to adapt to the Fed’s attack too little and too late. Unfortunately, the average consumer is literally paying for this monetary policy mistake by paying higher prices at gas stations, grocery stores, and just about everywhere.

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