Bitcoin and inflation: Investors expect the Fed to accelerate rate hikes
Bitcoin and inflation: Investors expect the Fed to accelerate rate hikes. Amid rising inflation concerns, respondents to the CNBC-Fed poll believe the US Federal Reserve will announce a cut decision today and raise interest rates much earlier than the previous forecast.
The Fed is expected to reduce monthly purchases of government bonds and mortgage-backed securities by $ 120 billion by nearly $ 15 billion per month, which is expected to end in May.
The CNBC poll shows investors are looking forward to November.
In addition, the consultants predict that the first rate hike will come earlier, namely in September 2022 instead of December as in the previous survey.
44% of the 25 respondents believe the Fed will hike rates in July, while 60% believe inflation is such a big concern that the central bank should now stop all home purchases.
Peter Boockvar, Chief Investment Officer of the Bleakley Advisory Group, said:
“The current idea of the Fed is to get its balance sheet from $ 8.5 trillion to about $ 9 trillion by next July and interest rates stay at zero. Inflation and market reaction The bond market is about to spiral out of control from the Fed.”
The Fed has been criticized for being slow to raise rates.
“At some point the Fed will have to speed up its rate hike schedule or risk losing credibility,” said John Ryding, chief economic advisor at Brean Capital.
The Fed Fund futures markets have a 58% chance of a first rate hike in June and a 73% chance of a second rate hike in December.
Calls for faster tightening are growing as inflation concerns have become the biggest risk to the economy, overshadowing Covid, according to respondents.
The consumer price index forecast for 2021 has risen for the seventh year in a row to 4.8% year-over-year, up from 4.4% in September. The consumer price index is projected to rise from 3% in September to 3.5% in 2022, a sign that inflation is deviating from the Fed’s 2% target.
While 64% continue to view the recent surge in inflation as temporary, many remain concerned. In fact, 40% want the Fed to tackle rate hikes now. Only 26% believe that inflation has peaked.
Spending laws in Congress add to inflation concerns and call on the Fed to tighten it more aggressively.
Almost two-thirds believe that the Fed should offset new spending by rapidly increasing the rate of throttling, and 40% prefer faster rate hikes, while 56% oppose such measures.
Regarding the impact of spending bills on growth: 33% say it will contribute to GDP, 29% say it will slow growth and 38% believe it will have no impact.
In terms of jobs, 38% believe the new spending bill will create jobs, 29% say it will reduce employment growth, and 33% say it will not.
As for overall growth, the outlook continues to decline, with GDP expected to be around 5% this year, up from 6.6% in the July poll.
In terms of the stock outlook, 72% believe the stock is overvalued relative to its growth and earnings outlook, up from 56% in the previous poll.
The respondents assume that the S&P 500 will fall by half a percentage point by the end of the year and only increase by 3% next year. The stock is forecast to face rising 10-year government bond yields and hit 2.2% in 2022.
As Bitcoin magazine As Cointelegraph reported, both Twitter CEO Jack Dorsey and Tesla CEO Elon Musk have issued inflation warnings, highlighting Bitcoin’s role in these worrying times.
Elon Musk sees Bitcoin as a “miracle cure” for fiat diseases, and inflation is no mean feat. With net worth over $ 250 billion this week, the possibility of currency devaluation is more of a potential problem than ever.
Many people on Crypto Twitter said “Thank god he brought Bitcoin to this world” and stated that BTC will definitely become the reserve currency of the world.
Additionally, JPMorgan Chase analysts released a research report in October stating that inflation drove the price of Bitcoin to its all-time high, not the hype surrounding the exchange-traded fund, the first U.S. Bitcoin (ETF) futures contract .
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According to CNBC