Several reports detail that US Federal Reserve officials are determined to tighten monetary policy and raise the federal funds rate until inflation in America subsides. Chicago Fed President Charles Evans explained Tuesday that the central bank is likely to continue with larger-than-usual rate hikes until inflation is cured.
Fed ain’t ‘none close’ done when it comes to tightening policy, central bank hasn’t seen ‘inflation reversal’
The Federal Reserve is in a quandary as America’s inflation is at its highest since the 1980s. Tuesday a report the citation of three members of the US central bank indicates that Fed policymakers remain convinced that further rate hikes are needed to contain rising inflation in the country.
San Francisco Fed President Mary Daly explained during LinkedIn interview “we remain determined and fully united” in lowering inflation. Daley stressed that the Fed is “far from done” with monetary policy measures, and in terms of fighting inflation, she said, the central bank still has “a long way to go.”
“My modal perspective, or the perspective that I think is most likely, is actually that we raise interest rates and then keep them at whatever level we think is appropriate,” Daly said. Cleveland Fed President Loretta Mester had a similar opinion, as she said The Washington Post (WP): “We still have a lot of work to do because we haven’t seen this reversal of inflation.”
Chicago Fed President Charles Evans also shared his opinion on Tuesday. Evans explained reporters that the Fed is likely to continue with significant interest rate hikes until inflation comes down. While he spoke of larger than usual rate hikes in the 75 basis point range, Evans also clarified that a 50 basis point rate hike could still happen.
“If you really think the situation is not getting better… 50 basis points is a reasonable estimate, but 75 basis points might be fine too. I doubt more will be needed,” Evans said. Amid hawkish statements from members of the Fed on Tuesday afternoon (EST), cryptocurrencies, stocks and gold markets fell in price. On the other hand, the US dollar reinforced against the Japanese yen and other major fiat currencies after a short decline.
Volatility hits stocks, gold, cryptocurrencies
By Tuesday’s close, all major stock indices, including the Dow Jones Industrial Average, Nasdaq, NYSE and S&P 500, were down. Cryptocurrency markets have also lost some gains, with the market capitalization hovering just above $1.13 trillion. Bitcoin (BTC) dropped below $23,000 per zone unit, while Ethereum (Ethereum) fell below $1,600 per coin on Tuesday.
During the day on Tuesday, both leading crypto assets managed to rise above these regions. The next day, August 3, the entire crypto economy grew by just over 2%. Stocks and the crypto economy have begun to show more volatility as tensions between China and Taiwan rise. Gold has also fallen in price this month, as one ounce of fine gold was sold for $1,810 per unit on July 1, and today gold is trading at $1,765 per item.
Analysts say that the recent drop in gold is due to the strong US dollar. DXY index the charts show that the dollar remains strong after falling last week. “Gold cut gains after Wall Street became bullish that tensions between the world’s two largest economies will spiral out of control,” Edward Moya, senior market analyst at OANDA, told Kitco News. “A strong dollar is also weighing on gold as the dollar’s pullback over the past couple of weeks appears to be over.”
What do you think about the statements of various Fed members and the market reaction after the hawkish comments and tensions between China and Taiwan? Let us know what you think about it in the comments section below.
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