Fed’s Kashkari Warns of Labor Market Risks, Dismisses Inflation Fears

Federal Reserve Bank of Minneapolis President Neel Kashkari warned of unexpected risks in the labor market, emphasizing potential undue concerns over economic slowdown, during an October 17 public event.

Kashkari’s comments suggest further interest rate cuts amid economic uncertainty, likely boosting risk assets like Bitcoin and Ethereum, though no immediate institutional crypto market moves were noted.

Kashkari Highlights Labor Risks Amid Economic Slowdown Concerns

Minneapolis Fed President Neel Kashkari emphasized concerns over a potential labor market downturn outpacing inflation risks. According to Kashkari, the Federal Reserve’s focus will likely shift towards ensuring economic stability despite current inflation narratives.

The Fed has already cut interest rates by 25 basis points to counteract economic headwinds. Further cuts are supported by Kashkari as possible measures to stabilize the market if further negative trends in the labor market materialize.

“I think that there’s more risk of a labor market negative surprise than a big uptick in inflation,” said Neel Kashkari, President, Federal Reserve Bank of Minneapolis. source

Coincu Experts Discuss Crypto Market Response to Fed Policies

Did you know? Amidst Kashkari’s warnings, it is notable that in mid-2020, similarly dovish Fed signals led to a marked upsurge in BTC’s value and wider crypto market capitalization.

Bitcoin, represented by the symbol BTC, currently trades at $108,732.37 with a striking market capitalization of $2.17 trillion, according to CoinMarketCap. Seeing a trading volume increase of 21.93%, BTC signifies its potent market share with a dominance of 58.92%. This comes amid a 1.67% decline over 24 hours, extending a general downturn witnessed over the past 90 days.

Experts from the Coincu research team propose that monetary policies instilled by Fed decisions could encourage bullish trends in crypto markets. Aligning rate cuts with historical easing, such as during the COVID era, demonstrated positive correlations with rising demand for speculative assets like BTC and DeFi tokens.