FED May Cut Interest Rate By 50 Basis Points Next Month
Most Federal Reserve officials think they should slow the pace of rate hikes after approving a 0.75% point rate hike at their meeting earlier this month to combat high inflation. They could drop to a 50 basis point rate hike, at their meeting next month.
According to the WSJ, their discussion at the meeting, described in the minutes of the meeting released Wednesday, suggested they could slow the pace of rate hikes by 0.5 percentage points (or 50 basis points), at their meeting next month.
A majority of Federal Reserve officials favor an early slowing of rate hikes, even as some warn that monetary policy will need to be tighter than expected next year. Raising the base rate by 0.75% points for the fourth consecutive month shows that officials’ campaign to quell rising inflation has been somewhat effective.
However, in a sign of divisions among policymakers, others warn that there is a risk that the cumulative effect of interest rate increases could be “beyond necessary” to control inflation.
“A slower pace in these circumstances would better allow the committee to assess progress toward its goals of maximum employment and price stability,”According to the minutes
The minutes also showed growing concern about financial stability risks related to the Fed’s plans to rapidly increase borrowing costs, citing recent disputes in the UK government bond market that have forced the Bank of England to intervene.
However, investors continue to be skeptical of the Fed’s commitment to push for monetary tightening, especially as economic data becomes increasingly mixed. Despite objections from central bank officials, market participants predict the US economy will slip into a recession next year, forcing the Fed to cut interest rates.
Under the negative impact of the crisis following the FTX crash, the price of BTC plummeted. In 24 hours, BTC price recorded a 2.4% gain and is currently trading at $16,563. If next month’s interest rate hike falls to 0.5%, it will likely create a retracement for the BTC price.
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