Fidelity's head of global macro, Jurrien Timmer, has suggested that the U.S. Federal Reserve could potentially restart quantitative easing (QE), which he believes may impact Bitcoin and gold markets.
Potential Fed Quantitative Easing
Jurrien Timmer believes that the Fed may turn on the QE engines again, forecasting a positive shift for both Bitcoin and gold markets, as lower rates could trigger further growth in these assets. Timmer noted that if the Fed lowers rates beyond what is considered justified, it could lead to significant market changes.
Market Signals and Rates
Analyzing the situation, Timmer indicated that potential interest rate cuts by the Fed could lead to a 'bear-steepening' of the yield curve, signaling market concerns about future inflation. This might necessitate the purchase of long-term bonds to flatten the yield curve. Although recently the Fed refrained from cutting rates, at least two cuts are expected this year.
Future of the Fed's Balance Sheet
Timmer also highlighted that the Fed still has plenty of room for further balance sheet expansion. Currently, it is 23% of U.S. GDP, significantly lower than the 117% balance of the Bank of Japan. 'If another wave of fiscal dominance is on the horizon when new Fed leadership begins in 2026, I foresee lower short rates and Japan-style yield curve control from the Fed,' Timmer stated.
Thus, Jurrien Timmer's predictions may indicate serious changes in Fed policy, reflecting growing investor concerns and potentially affecting the Bitcoin and gold markets in the future.
