The Fed Funds Rate has been increased by more than 5% for the first time since 2007
Bitcoin has outperformed the stock market “in seven of the last 10 Fed days,” as eToro’s Callie Cox pointed out.
In the past few months, authorities abruptly took over the First Republic, after comments from the CEO sparked a bank run, Signature followed SVB’s lead a few days later, and Silvergate voluntarily liquidated back in March. JPMorgan had to intervene to purchase First Republic.
The absence of any reference to future rate rises might indicate that the Fed is pausing it’s tightening campaign.
Chair of the Federal Reserve Board of Governors Jerome Powell has said that the Fed is “prepared to do more” if the economy requires it.
Although Fed Chair Powell said in March that it was “too early” to know the full impact of the banking crisis, the central bank reaffirmed in May that the “banking system is sound and resilient.”
Powell spoke to the banking industry, emphasizing that the Fed would be keeping a tight eye on the financial institutions.
The market “has already priced it,” therefore a gentle landing is probable for the Fed and growth will continue in financial markets if rate cuts begin by the end of 2023. In an email to Blockworks, YouHodler’s chief market strategist Ruslan Lienkha warned that a recession or prolonged period of excessive inflation might result from any divergence from the plan.
Since the Fed began its rate-increasing cycle, Powell has been using the phrase “soft landing” to describe the potential of decreasing inflation without a financial collapse or recession. He restated this view in March.
Despite some encouraging signs of moderation, inflation remains stubbornly high. But the Fed’s objective is to restore inflation to its 2% target rate, which is also the target rate for the Fed funds rate. “High inflation creates dangers and we are paying close attention to them,” Powell said.