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Investors are patiently waiting for interest rate cuts to fuel risk-on-asset markets amid high inflation and macroeconomic uncertainty.
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Kevin Hassett, the director of the National Economic Council — a White House advisory board to President Trump — disclosed that he is now having “regular” meetings with Federal Reserve chairman Jerome Powell.
During a recent appearance on CBS’ Face The Nation, the host asked Hassett if his meetings with the Federal Reserve chairman were to influence interest rates. The White House advisor responded:
“Jerome Powell is an independent person. The Federal Reserve’s independence is respected. The point is the president’s opinion can also be heard — he is the president of the United States.”
The advisor added that long-term rates have already come down since the Trump administration took office and cited a 40 basis point reduction in 10-year Treasury rates as evidence that the market believes inflation is coming down.
Lower interest rates are a bullish catalyst for cryptocurrencies and other risk-on asset classes, as access to cheap credit encourages market participants to borrow capital to purchase investments and businesses.
Federal Reserve chairman Jerome Powell testifying before the Senate Banking Committee on Feb. 11. Source: Senate Banking Committee
Related: Bitcoin could reach new highs in Q1 despite sluggish jobs print: Grayscale Research
Federal Reserve casts doubt on future rate cuts as inflation remains stubborn
On Feb. 11, Federal Reserve chairman Jerome Powell testified before the Senate Banking Committee and said that the central bank does not “need to be in a hurry” to adjust interest rates — casting doubt over future rate cuts in 2025.
The US Bureau of Labor Statistics released its January 2024 Consumer Price Index report on Feb. 12, which showed higher-than-expected inflation figures.
According to the report, annual inflation hit 3% in January 2025 — a 0.1% increase over expectations — causing Bitcoin to fall below $95,000 as investors anticipated a high interest rate environment in the coming months.
Persistently stubborn inflation, a looming trade war, and other macroeconomic risks have made investors cautious about investing in risk-on assets like crypto.
Target interest rate probabilities for the Federal Reserve’s March 2025 meeting. Source: Chicago Mercantile Exchange
The Chicago Mercantile Exchange’s (CME) FedWatch tool currently shows that only 3% of market participants believe the Federal Reserve will slash interest rates by 25 basis points at the Fed’s next meeting in March 2025.
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This article first appeared at Cointelegraph.com News
