Christopher Waller, board member of the American Federal Reserve (FED), spoke about the interest rate policy of the Central Bank during a speech in Seoel. According to Waller, an interest rate reduction is possible in 2025, provided that inflation is decreasing further and the labor market remains strong. This can turn out favorably for risky assets such as Bitcoin (BTC) and other cryptos.
Fed remains waiting despite inflation pressure
Waller acknowledged that recent import duties among the 47th President of the United States, Donald Trump, can eventually stimulate inflation. Yet he regards this price pressure as temporary: “We have to look through it,” said the FED director. If the core inflation continues to move towards the objective of two percent, it does not exclude a relaxation of interest rate policy.
At the same time, Waller warned that the effects of the rates will be visible especially in the second half of 2025. Then rising prices can go together with falling production and job losses. With a rate of ten percent, however, he expects only limited impact for consumers. According to him, the current power of the labor market gives the Fed the space to take a look at the policy.
Markets expect interest rate reduction later this year
The following policy meeting of the FED will take place on 18 June. The Futuresmarkt considers the chance that interest rates will then be reduced: only 1.3 percent count on a reduction to 4.00–4.25 percent. The chance that the current level of 4.25–4.50 percent will be maintained is almost 99 percent.
The expectations become more optimistic from September. Then the chance of a reduction to 4.00–4.25 percent at almost sixty percent is estimated. Towards December it increases to a small chance of 5.8 percent that the interest rate even drops to 3.25–3.50 percent. These prospects can cause new capital flows to the cryptomarket.
Source: https://newsbit.nl/fed-topman-rente-kan-omlaag-in-2025-goed-nieuws-voor-bitcoin/
