Raphael Bostic, President of the Atlanta Federal Reserve Bank, shared his updated interest rate forecast for 2025 on May 16.
Changes in Interest Rate Forecasts
Raphael Bostic adjusted his outlook, anticipating only one interest rate cut in 2025 due to rising economic uncertainties and persistent inflation concerns. He noted, "I moved to one mainly because I think we’re going to see inflation be very bumpy and not move dramatically to the 2% target." This shift in policy could affect liquidity in financial markets.
Market Response to Fed's New Policy
Expectations for the rate cut have been recalibrated amid prolonged monetary restrictions, impacting risk assets. A slowdown in economic growth is forecasted at 1%-0.5% for the year, which is a key factor. Market reactions indicate a conservative sentiment among investors, leading to price shifts for major assets like Bitcoin and Ethereum.
Crypto Markets and New Monetary Policy
Historically, Fed policy changes lead to immediate market shifts. As of 08:20 UTC on May 16, 2025, Bitcoin (BTC) trades at $103,387.24, with a market cap of about $2.05 trillion. Analysts indicate that prolonged stringent monetary policies may dampen speculative interest and liquidity in the crypto sector.
Bostic's forecasts suggest a cautious approach to economic challenges, with potential implications for both traditional financial and cryptocurrency markets.
