BlackRock Expects No Fed Rate Cuts Until June, Bitcoin Post-Halving Rally Could Delay

BlackRock, Bank of America, and others do not expect rate cuts coming in the next few months this year, postponing the earlier plans of starting rate cuts in March. The U.S. Federal Reserve kept the fed funds rate steady at 5.25%-5.5% for a third consecutive meeting in December as inflation continues to cool and Fed officials expect a soft landing. BlackRock’s predictions to impact bitcoin rally?

BlackRock and BofA on Fed Rate Cuts

Laura Cooper, senior macro investment strategist at BlackRock, in an interview with Bloomberg on January 19, said the U.S. Federal Reserve will not start rate cuts in March. She added the retail sales print this week shows the resiliency of the US economy, clearly indicating the Fed could delay rate cuts.

Cooper pointed out that the inflation is still above their 2% target. She expects the Fed to start cutting interest rates in June, earlier than the European Central Bank (ECB). She predicts that the Fed will cut rates by 75-100 basis points by the end of the year.

She said the Fed’s first rate cut will be “quickly followed by the European Central Bank,” and the Bank of England may cut rates after the European Central Bank. The European Central Bank will have to make a larger rate cut. Traders are betting that the Federal Reserve will cut interest rates for the first time in May; Cooper said the market has become “very active” in pricing, adding, “There still needs to be some degree of repricing, which makes us more convinced that there will be some volatility in the future.”

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Bitcoin Rally After Bitcoin Halving

BofA and other bank analysts have also reported delay in Fed rate cuts to the third quarter. Moreover, hawkish Federal Reserve officials including Atlanta Federal Reserve President Raphael Bostic and Fed Governor Christopher Waller pushed back this week on aggressive policy easing bets, tempering expectations of an interest rate cut in March. Data released on Thursday showed that initial jobless claims unexpectedly declined to 187K, the lowest level since September last year.

BlackRock’s Laura Cooper also expects a strong US dollar this year, which could also hamper Bitcoin rally near Bitcoin halving. Strong US dollar causing selling pressure on Bitcoin. The US dollar index (DXY) reverses back above 103.50 from 101 in early January.

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