Host of CNBC’s Mad Money Jim Cramer He recently shared his thoughts on Federal Reserve Chair Jerome Powell’s comments during the just-concluded two-day Federal Reserve meeting.
Host of CNBC’s Mad Money Jim Cramer He recently shared his thoughts on Federal Reserve Chair Jerome Powell’s comments during the just-concluded two-day Federal Reserve meeting.
Federal Reserve Chairman Jerome Powell suggested that raising interest rates was unlikely to be the Fed’s next action. Officials would need to see compelling evidence that the policy is not tight enough to bring inflation back to its 2% target.
Cramer told investors to believe Federal Reserve Chair Jerome Powell when he suggested Wednesday that a rate hike was unlikely, despite persistent inflation.
Although Powell’s comments temporarily calmed markets, Cramer indicated investors could become worried again as employment data is due on Friday. The figures could provide more information about whether the economy is slowing or accelerating.
Although Powell stopped short of signaling that rate cuts were likely this year or that rates were at a peak, Cramer said the Fed chief had managed to take “the feared rate hike scenario off the table.”
Given Cramer’s history of making predictions that turn out to be contrary, particularly in the cryptocurrency market, this raises the question of the implications of recent developments on the macro front for cryptocurrencies.
Implications for cryptocurrencies
Historically, Bitcoin has had four drops in April of the last decade, three of which foreshadowed losses in May of 18% on average, according to Bloomberg data.
Still, if inflationary pressures ease and markets resume their bets on a much looser stance from the Federal Reserve, cryptocurrencies and other speculative assets could get some breathing room.
The Federal Reserve has kept interest rates consistently in the 5.25%-5.5% range for nearly nine months, and Powell’s statements do not imply that the central bank is willing to lower rates anytime soon.
It is unusual for interest rates to remain stable for more than a year. That said, the delayed impact of higher rates for longer remains a concern for risk assets like cryptocurrencies. This could be a tail risk that could keep the bulls at bay.
