The Federal Reserve may not be able to cut interest rates anytime soon, but if they do so, easing could be aggressive, according to Dutch investment banks.
On Wednesday, the Fed held its benchmark rate between 4.25% and 4.5%, with Chairman Jerome Powell raising the ghost of stagflation during a press conference after the announcement.
Both Crypto and traditional markets have looked to Powell for clues to potential interest rate cuts in June. ING pointed to his comments that “uncertainty about the economic outlook has increased,” saying that “there is an increase in the risk of higher unemployment and higher inflation.”
The comments suggest that “there is little tendency to move until you're confident in the direction your data is looking at. This means that rate reductions may be delayed, but there is a more sharp risk when it comes,” ING told the client.
Investment banks said the waiting position could “continue until September.”
The banks decide to act on the Fed, possibly due to concerns that trade and supply disruptions can amplify inflation, as well as war and supply disruptions at ports and logistics companies.
Bitcoin has risen from $96,000 to $99,5000 since the Fed's decision on Wednesday. President Donald Trump helped bully trade deals with major economies to recover risk sentiment.
