Common thinking would suggest that if Federal Interest Rates went on to hike, then what would be safe to keep your money? Of course, crypto and gold
To fight the uncontrolled and rampant battle against inflation, the central banks in the US are gearing up to unleash their economic armory. This would be the reason for causing the cost of living for general people to skyrocket. Such monetary arsenal includes the interest rates to increase at a high pace that ends up increasing the borrowing cost and encouraging people to save more if there would be something to save after all this in the average household.
On 18th April, President of St. Louis Federal Reserve James Bullard said that a target of approx 3.5% every year could be somehow achievable whether the central bank makes quick moves to raise their interest rates. According to the Wall Street Journal, considering the size of the needed increases to get there, he said that 50 basis points greater than one is not his base case, but he did not rule out an increase of 75 basis points.
The banker at the Central bank institution thinks that the bank should discharge or release from any such responsibility for the economy and added that he doesn’t think that anyone can blame a recession on the Federal Reserves.
Following the first increase in the past three years of about 0.25%, the current interest rate was about 0.5% last month. According to the chairperson Jerome Powell, an increase of 50 basis points is possible at the meeting of Feds on 3rd-4th may.
Generally, bitcoin and gold are both considered stores of the value of a safe haven or something that lets the money grow or at least keeps the money stable despite the odds or tough financial times. These assets have been seen to be in demand whenever there is a downturn in economic situations. With the inflation of 8.5% in the United States, the regular scenario is not looking to change in the short term or anytime soon.
Prices of gold are near their peak of about $1,974/oz at the time, after getting a gain of 8% this year so far. On the other hand, the so-called digital gold, bitcoin, has been going through some tough times where it remains in retreat for a large portion of this year, where it has fallen about 12% overall since 1st January.
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Source: https://www.thecoinrepublic.com/2022/04/20/why-do-economists-think-averaging-federal-reserve-monetary-will-boost-crypto-and-gold/