Just minutes ago, Federal Reserve member Williams made statements that led to the price of Bitcoin dropping back to the $42,200 zone. Following the Fed meeting, there was excessive optimism in the market and indications that the upcoming 2024 recovery would continue. However, Williams believes that it’s time to balance these expectations, and his remarks are in line with this view.
Months ago, we mentioned that the Fed had unofficially declared its interest rate ceiling and that increases had stopped. Recent statements by Powell reflected this as well. Now the real question is when interest rates will start to decrease. There’s a strong belief in the market that cuts will begin after the March meeting, with everyone looking for sure at the start of the third quarter for reductions.
However, Fed member Williams said something to dampen this optimism and to convince investors that there would be no cut in March. This caused the price of Bitcoin to drop back down to the $42,200 range.
When we focus on the key parts of the entire conversation, Williams said the following:
“We are in the right place or close to the right place for monetary policy. The Fed should be ready to increase again if necessary. It’s too early even to think about the timing of interest rate cuts. It’s too early to consider a rate cut in March. The topic of interest rate cuts is not the main question in front of the Fed. The overall financial conditions have tightened. We are not ready to say when balance sheet reduction will stop. The Fed should focus on its targets, not market views. The market may be reacting stronger than the forecasts show. We need to move policy back to more normal levels over time. We must be prepared for unexpected events. My base scenario for the economy is good, inflation is falling. Views on the Fed’s interest rate cut depend on individual officials’ opinions. I am not speculating on what will happen with interest rates. We are focused on whether monetary policy is in the right place.”
His most crucial sentence was:
“Right now, we are really not talking about a rate cut.”