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U.S. Federal Reserve officials made hawkish comments in their speeches on Wednesday, emphasizing the need for further rate hikes to curb inflation. Fed officials’ hawkish comments came after the International Monetary Fund (IMF) warned of inflation and less economic growth in 2024, recommending central banks to keep monetary policy tight. This could delay Bitcoin’s post-having rally as investors will remain skeptical of macro factors impacting upside momentum.
Fed Officials Turns Hawkish After IMF Forecasts
Several Federal Reserve officials in recent days have suggested the central bank may not raise its benchmark interest rate any further than its current 22-year high.
Minneapolis Federal Reserve Bank President Neel Kashkari said if the economy becomes too strong, the Federal Reserve may have to raise rates further. Kashkari described the recent increase in the 10-year Treasury yield as “perplexing.”
San Francisco Federal Reserve Bank President Mary Daly asserts the neutral interest rate (R-star) should be higher now than during the pandemic. It indicates that the Fed may have to keep rate hikes for longer. US Treasury yields fell from a five-month selloff this week as Fed speakers including Daly signaled they won’t have to take rates any higher due to a recent spike in bond yields.
Meanwhile, Federal Reserve Governor Michelle Bowman said “interest rates may need to rise further and stay higher for longer than previously expected” to curb inflation. She argues inflation is still above the FOMC’s 2% target and the labor market remains tight.
The US Fed kept benchmark interest rates unchanged last month at 5.25% to 5.5%. The CME FedWatch Tool shows an 86.8% probability of rates remaining unchanged in the next FOMC meeting on November 1.
Bitcoin Risks Falling to $25K
BTC price fell 1% in the last 24 hours and nearly 2% in a week, with the price currently trading at $27127. The 24-hour low and high are $27017 and $27605, respectively. However, the price has increased significantly since it started to move upwards this January.
US PPI for September comes in hotter than expected, meaning that the U.S. Dollar Index (DXY) will probably have a bounce upwards and Bitcoin will see some corrections.
Despite weak technical chart patterns and indicators, BTC price is expected to bounce from the $26,500 level. Falling to $25k seems less likely amid neutral sentiment and whales looking for entries ahead Bitcoin halving.
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