Powell hints at delaying interest rate cut until later! Bitcoin V surges higher by 64,000, Ethereum stands back at $3,100

Against the background of higher-than-expected U.S. inflation data, Federal Reserve Chairman Powell earlier admitted that there was a lack of progress in combating inflation, suggesting that the timing of an interest rate cut may be postponed to a later date. However, Bitcoin did not continue to fall, hitting a maximum of $64,376 in the early morning.

The U.S. consumer price index (CPI) announced last week increased by 3.5% year-on-year in March, which was higher than expected. Retail sales in March, released on the 15th, also increased by 0.7% compared with February, which was also higher than market expectations.

Against the backdrop of continued strong economic growth and stagnant progress in combating inflation, Chairman Jerome Powell delivered a speech earlier today (17th) Beijing time, acknowledging that recent data showed a lack of progress in combating inflation and had not brought about Confidence enough to suggest that the timing of a rate cut may be postponed to a later date.

"Given the strength of the labor market and the progress made so far in inflation, it may be appropriate to allow more time for high interest rate policies to continue to work, and the current policy stance is well positioned to manage risks."

Fed officials change attitude

Originally, in early March, Powell and Fed officials believed it would be appropriate to cut interest rates later this year, and expected to cut interest rates two or three times. However, as a number of inflation data once again exceeded expectations, many officials from the Federal Reserve also spoke out one after another, emphasizing that the direction of monetary policy depends on economic data, and emphasized that there is no rush to cut interest rates.

Wall Street analysts have also successively revised their forecasts for interest rate cuts, predicting that there will only be one or two rate cuts this year, and that the first rate cut will be later than previously expected. Nick Timiraos, a reporter for the Wall Street Journal who is known as the "Fed mouthpiece", also wrote that from Powell's latest remarks, it can be seen that the development of the Federal Reserve's monetary policy has changed significantly, shattering expectations that the Fed may cut interest rates. .

According to CME Group's FedWatch tool, the market currently estimates that the probability of a rate cut in June is only about 15%, the probability of keeping interest rates unchanged is close to 85%, and the probability of a rate cut in July is not more than 40%.

UBS worries the Fed will continue to raise interest rates

Even more radically, UBS strategists warned yesterday (16th) that various data have increased the possibility that the Federal Reserve will raise interest rates instead of cutting them, and interest rates may rise to a maximum of 6.5% next year.

“If U.S. economic growth remains resilient and inflation remains at 2.5% or higher, the Federal Reserve will raise interest rates again before the beginning of next year, and the federal funds rate will reach 6.5% by the middle of next year. This risk is real. "

UBS has lowered its forecast for the Federal Reserve to cut interest rates this year from 275 basis points (11 basis points) to just 50 basis points (2 basis points). UBS warned that if the U.S. economy does not come to a standstill and triggers further interest rate increases, U.S. Treasury yields will rise. As the curve flattens and benchmark yields rise sharply, the stock market may fall by 10% to 15%.

Performance of the four major U.S. stock indexes on the 16th:

Perhaps because the market has already digested expectations that the Federal Reserve may delay an interest rate cut, the four major U.S. stock indexes did not close with particularly large fluctuations, and the Dow Jones and the Federal Reserve also closed higher.

The Dow Jones Industrial Average rose 63.86 points, or 0.17%, to close at 37,798.97 points.

The S&P 500 fell 10.41 points, or –0.21%, to close at 5,051.41 points.

The Nasdaq Composite fell 19.77 points, or -0.12%, to close at 15,865.25.

The Philadelphia Semiconductor Index rose 41.43 points, or 0.89%, to close at 4,720.53 points.

Bitcoin holds firm, hits 64,000

In the cryptocurrency market, Bitcoin reached a low of $61,688 before Powell's speech, and then continued to fluctuate higher, reaching a maximum of $64,376 near six o'clock this morning. It was trading at US$63,768 at the time of writing, up 0.42% in the past 24 hours.

The trend of Ethereum is similar to that of Bitcoin, reaching a maximum of US$3,119 in the morning and trading at US$3,089 at the time of writing.

CoinMarkeCap data shows that yesterday’s declines in the other top ten currencies also converged.