FED Policy for the Equity and Crypto Market
The monetary policy of the U.S. going through the financial market conditions. It includes the equities and crypto that highly relates with the equity market. The policy makers were very optimistic this year towards the stock market. It prepared the traders with its “forward guidance” with the upcoming changes to monetary policy, this year. But it looks like the previous version of FED. As in July, the FED Chair announced that the central banks stop practicing the “forward guidance.” Jerome Powell, is the Chair of the Federal Reserve of the U.S.
This meant to be in crypto too as the crypto prices are strongly related with the equities. This may seem not a good nes for crypto investors because they are already suffering with massive losses.
The prior mandate of the U.S. Central Bank is price stability and maximum employment. The inflation is running 2% above the FED’s goal, due to the prices are not stable at present.
The unemployment rate is still low and that’s why the employers are adding more than 300,000 jobs in a month. It may be positive news for job seekers, but something that may stoke-up inflation, and generate pressure on the FED to take strong action. It may sound like potential trouble for the stocks and crypto markets.
Crypto Expert’s Thoughts on the FED Policy
Brian Overb, the senior market strategist at Ally Financial, mentioned in a note that “It’s clear the Fed wants to see tighter financial conditions, which include lower stock prices.” Ally Financial is the U.S. based bank holding company.
The president of Bianco Research, Jim Binanco, said that, “The Fed wants to create a reverse wealth effect and get people that own assets to rethink some of their purchase habits and maybe slow demand,” and “It’s a dangerous game. You want the market to go down, but you gotta be careful when that starts to happen because if you get everybody running for the hills because they’re going to be the enemy of the market, you could turn it into a rout.”
Source: https://www.thecoinrepublic.com/2022/09/07/the-feds-policy-seems-tough-for-the-crypto-world/