- Trump is pressing the Federal Reserve to lower interest rates promptly, linking this move to his proposed tariffs on imports.
- Jerome Powell warns that cutting rates prematurely could harm the economy and prefers to wait for clear signs of decreasing inflation.
- Bitcoin’s price dropped from $96,500 to $94,000 but later rebounded to $98,000.
President Donald Trump is pushing the Federal Reserve to reduce interest rates immediately. He is of the view that increased inflation results from previous policy and advocates that reduced rates go hand-in-hand with his proposed tariffs on foreign imports.
Fed Rate Cut
Federal Reserve Chairman Jerome Powell doesn’t agree. He cautions that inflation remains too high and reducing interest fed rate cut prematurely could damage the economy. Powell would like to see unmistakable signs that inflation is falling before making a move.
Financial markets have been unstable as a result of these variations in opinions. For instance, the price of Bitcoin dropped from $96,500 to $94,000 following the release of the CPI report, prompting some investors into huge losses. It then subsequently recovered to $98,000, a gain of 4.4% from its lowest level of the day.
Most traders in the options market are bullish. They prefer call options, particularly those set to expire on February 14, with strike prices ranging from $97,000 to $100,000. This is an indication that traders believe Bitcoin’s price will continue to appreciate.
As the government responds to these economic woes, President Trump’s aggressive quest for rate cuts and tariffs forms the nucleus of his agenda for curbing inflation and increasing growth. Whether the strategies work or not, experts are not clear about.
Market players and investors should keenly follow the above developments. Fluctuations in monetary and fiscal policies and reaction from markets will go a long way to shape several assets, including virtual currencies such as Bitcoin.
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