Today, all eyes are on a key speech by Federal Reserve Chair Jerome Powell, as investors look for clues about the U.S. central bank’s interest rate policy. With a rate cut considered highly likely by the market, we’ll cover the expectations, the impact of the new Fed policy, and the potential successor to Powell—developments that could also ripple through the crypto market.
Today’s Speech #
The U.S. central bank (the Fed) is expected to cut interest rates next week. This is likely to happen if the Fed believes inflation is under control but the job market is weakening. Currently, the market prices in an 86% chance of a rate cut.
Much attention is focused on a speech by Fed Chair Jerome Powell scheduled for 10:00 PM Dutch time tonight. Investors will listen closely, as he may hint at the decision to be made during next week’s official Fed meeting. On December 10, Powell will announce whether the rate will be adjusted. The expectation is a 0.25 percentage point cut.
The Fed has two key goals: ensuring sufficient employment and preventing prices from rising too quickly. Recent data shows inflation is lower than expected, which is positive. The labor market presents a mixed picture: it’s becoming harder to find jobs, but the number of people applying for unemployment benefits has recently fallen.
Fed Ends QT: What It Means #
If the Fed stops Quantitative Tightening (QT), it means it will no longer ‘pull’ money out of the financial system by not reinvesting or selling bonds, allowing the money supply to stabilize or later grow again.
This typically leads to more available money and less stress on financial markets. For the crypto market, this could be positive, as investors are more willing to take risks when there is more liquidity and borrowing becomes cheaper or easier.
That could drive more capital toward crypto and potentially higher prices, though the market remains sensitive to sentiment, regulation, and economic developments.
Potential Successor to Jerome Powell #
There is intense speculation about who will be the next chair of the U.S. central bank. The current chair, Jerome Powell, is nearing the end of his second term, so a new candidate will be appointed.
According to the prediction platform Kalshi, there is a 55% chance that Kevin Hassett will become the next Fed chair.
Financial expert Shay Boloor explains in a post that people don’t realize how bullish Hassett’s appointment would be for bitcoin and the crypto market:
“Hassett has spent his entire career arguing that the economy accelerates when capital stays cheap & the Fed leans toward expansion instead of restraint.”
— Shay Boloor (@StockSavvyShay) on Twitter