The week began with positive news for investors as two Fed officials signaled potential interest rate cuts in July. These statements support market expectations, particularly among crypto investors.
Internal Fed Consensus on Rate Cuts
Fed representatives Christopher Waller and Michelle Bowman expressed hope for rate cuts in July if data confirm cooling inflation and labor market stabilization. Bowman noted:
> "By the time of our next meeting in July, we will have another month of employment and inflation data. If those reports continue to show positive inflation trends and limited upward pressure, I would support reducing the policy rate to bring it closer to neutral while maintaining labor market strength."
Positive Response from Crypto Market
The crypto market reacted positively to the news of a potential rate cut. Bitcoin surpassed $102,000, and the S&P 500 nearly hit the 6,000 mark. The alignment of slowing job creation and contained inflation seems to provide the Fed with breathing room, increasing the appeal of risk assets, including digital currencies.
Expectations for PCE Data
The focus this week will be on the upcoming PCE inflation report, the Fed's preferred inflation metric. If the data comes in within expectations without any negative surprises, the probability of a July rate cut could increase significantly. These macro signals are crucial for crypto investors.
Current analysis indicates that an expected rate cut at the Fed's July meeting could be a significant growth factor for the crypto market. Investors and analysts will closely monitor the upcoming PCE data.
