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Yesterday, the Federal Reserve Board announced doubling the pace of its asset tapering to $30 billion a month, which was slightly more hawkish than consensus expectations. Rather than end all asset purchasing today, Jerome Powell highlighted that a calculated, methodical approach to winding down asset purchasing is a more stable approach for markets. The current plan is for asset purchases to end by March 2021 with the market expecting a high probability of three interest rate hikes in 2022, up to 100 basis points.
On cryptocurrencies, Powell commented that he doesn’t see them as a significant monetary stability concern, however that the leverage within the system is value watching. He famous they’re dangerous and speculative whereas highlighting the potential advantages of stablecoins in the event that they have been to be regulated.
All that stated, Powell had an incredible quantity of dovish commentary in his Q&A regardless of the extra hawkish actions, indicating the Federal Reserve is able to pivot their coverage as obligatory with extra accommodative financial coverage. This was a good short-term sign to markets. We’ll see actual financial tightening coverage begin to play out in markets if price hikes occur in March.
Following the bulletins of the Fed’s anticipated taper coverage, each bitcoin and equities rallied in tandem, indicating the assembly was a promote the rumor and purchase the information sort of occasion.