Arthur Hayes: Fed rate cut will lead to higher inflation
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Johny Smith
2024/09/30
3 mins read
Following yesterday’s meeting, for the first time in 4.5 years, the Fed lowered the key rate by 50 basis points. According to BitMEX head Arthur Hayes, this was primarily a politically motivated step. He believes that in the future it will provoke a sharp increase in inflation in the United States. “I have a suspicion that Jeanette Yellen and Jerome Powell want to stimulate financial markets. This could help Kamala Harris win the upcoming elections,” the specialist said.
According to Arthur Hayes, the reduction in the key rate does not correspond to the current macroeconomic picture observed in the United States. It was emphasized that the national economy is showing strong growth, while unemployment is at historically low levels. “It seems to me that they are trying to force the markets to rise artificially. This is necessary so that people feel richer when they go to the polls,” the expert noted.
It is worth emphasizing that the cryptocurrency market reacted quite positively to the Fed’s decision to lower the key rate. Over the past 24 hours, the digital coins segment added approximately $100 million in capitalization against the backdrop of this event.
As for the flagship crypto asset, it confidently consolidated above the round mark of $60,000. This was followed by stable growth up to the level of $62,000. The market capitalization of the coin increased by 2.8%. At the same time, trading volume over the past 24 hours has increased by almost 20%.
The market reaction became natural. The fact is that most investors were expecting a 25 basis point rate cut. However, the Fed surprised trading participants. Officials also said that they will continue to implement the quantitative easing program. According to forecasts, by the end of next year the rate could be reduced to 3.4%.
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