The number of investors expecting an interest rate cut at the March meeting of the Federal Open Market Committee increased in response to fears of a hawkish Fed candidate.
The number of traders expecting an interest rate cut at the March Federal Open Market Committee (FOMC) meeting has risen to 23%, following investor fears of a hawkish stance from Kevin Warsh, US President Donald Trump’s Federal Reserve chair nominee.
Investors and traders forecasting a rate cut surged by nearly 5% from Friday, when only 18.4% signaled they were expecting an interest rate cut, according to data from the Chicago Mercantile Exchange (CME) Group.
Those anticipating a rate cut in March forecast a 25 basis point (BPS) cut, with no investors expecting a rate cut of 50 BPS or more.
President Trump nominated Warsh in January as a replacement for Federal Reserve Chairman Jerome Powell, whose term is over in May.
Interest rate policy can influence crypto asset prices, with easing liquidity conditions seen as a positive price catalyst, and tightening liquidity conditions through higher rates impacting asset prices negatively, as access to financing dries up.
Related: Bitcoin’s next bull market may not come from more ‘accommodative policies’
Markets and investors spooked by Warsh’s nomination
“The nomination of Kevin Warsh as the next Fed Chair has shaken markets to the core,” crypto market analyst Nic Puckrin said in a message shared with Cointelegraph.
Puckrin attributed the keen decline in precious metal prices in overdue January and early February to investor perceptions of Warsh, who is perceived as more hawkish, meaning he favors keeping interest rates higher for longer. He said:
“Markets are analyzing Warsh’s views on the Fed’s future policy, particularly the central bank’s balance sheet, which he believes is ‘trillions larger than it should be.’ If it actually adopts policies to shrink its balance sheet, markets will have to reckon with a lower liquidity environment.”
Thomas Perfumo, global economist at cryptocurrency exchange Kraken, told Cointelegraph that Warsh’s appointment sends a “mixed” macroeconomic signal to investors.
Warsh’s appointment could signal that liquidity and creditworthiness in the U.S. will stabilize rather than boost as cryptocurrency investors had predicted, Perfumo said.
Warehouse: If the cryptocurrency bull run is coming to an end… it’s time to buy Ferrari: Crypto Kid
[–>
