As economic conditions continue to worsen, financial experts worldwide are increasingly placing the blame at the feet of the Federal Reserve after the central bank was slow to respond to rising inflation early on.
Financial markets are currently experiencing their worst stretch of losses in recent history and it doesn’t appear that there is any relief in sight as May 24 saw the tech-heavy Nasdaq fall another 2%, while Snap, a popular social media company, shed 43.1% of its market cap in trading on May 23.
This past couple of months have been absolutely brutal for the markets… 8 consecutive weeks of red candles in the #SPX, #NASDAQ and #BTC… no significant bounces pic.twitter.com/hgU2VwIoxh
— Crypto Phoenix (@CryptoPheonix1) May 24, 2022
Much of the recent turmoil again comes back to the Fed, which has embarked on a mission to raise interest rates in an attempt to get inflation under control, financial markets be damned.
Here’s what several analysts are saying about how this process could play out and what it means for the price of Bitcoin (BTC) moving forward.
Will the Fed tighten until the markets break?
Unfortunately, for investors looking for short-term relief, economist Alex Krüger thinks that “The Fed will not stop tightening unless markets break (far from that) or inflation drops considerably and for many months.”
One of the main issues affecting the psyche of traders is the fact that the Fed has yet to outline what inflation would need to look like for them to take their foot off the rate hike gas pedal. Instead, it simply reiterates its goal “to see clear and convincing evidence inflation is coming down towards its 2% target.”
According to Krüger, the Fed will “need to see the year-over-year inflation drop 0.25% – 0.33% on average every month until September” if it is to meet its goal of bringing down inflation to the 4.3% – 3.7% range by the end of the year.
Should the Fed fail to meet its PCE inflation target by September,…
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