‘US Fed to hold emergency meeting’, rate cut possible

It is an unprecedentedly bad day for global financial markets. Japanese markets have crashed with the yen down 13%, and other Asian markets, such as Korea and Taiwan, have suffered losses of almost 10%.

The crypto market has also been hit hard, with Bitcoin (BTC) losing almost 27.5% in a week. In addition, S&P futures, contracts that allow investors to speculate on the S&P 500 index, have fallen by 4%. These developments point to widespread market stress.

In response to the global crash and panic, the US Federal Reserve (Fed) has called an emergency meeting. Experts expect that the Fed will tackle the crisis by cutting interest rates by 50 basis points. Each basis point is equivalent to a 0.01% cut or increase in interest rates. In this case, it means that rates could be cut by 0.50%. This is done to make borrowing cheaper and stimulate investment.

Quick action is essential

CNBC’s Ran Neuner stresses that swift action from the Fed is necessary to prevent a financial meltdown that could be worse than the 2008 crisis, saying the Fed should hold an emergency meeting.

Emergency Fed rate cuts are rare and only used in severe market conditions. It is likely that the Fed’s rate cuts will have a significant impact on the crypto market. Historically, lower interest rates have led to increases in Bitcoin prices as traditional savings methods become less attractive.

Cause of crisis

The current financial storm has been largely caused by the collapse of the Japanese cash-and-carry trade. This is an arbitrage strategy in which investors profit from differences between the spot price (the current market price) and the futures price (the agreed future price).

In addition, poor unemployment figures in the United States (US) and instability in the Middle East are also identified as major factors contributing to the crisis.

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