The Federal Reserve is maintaining its aggressive approach in an effort to lower the nation's inflation rate. The Fed's resolve is being tested by threats to the stability of the world's financial system. Lawrence Summers, a former secretary of the Treasury, now urges the Fed to stick with its hawkish monetary policy. The price of one bitcoin has decreased by 2.42% over the past day, and it is now worth $19,490.
The price of Bitcoin is determined by the general economy. Bitcoin price movement is sluggish due to unfavourable market sentiment.
The Federal Reserve is maintaining its aggressive approach in an effort to lower the nation's inflation rate. The Fed's resolve is being tested by threats to the stability of the world's financial system. Lawrence Summers, a former secretary of the Treasury, now urges the Fed to stick with its hawkish monetary policy. The price of one bitcoin has decreased by 2.42% over the past day, and it is now worth $19,490.
Why the Value of Bitcoin May Fall
Bitcoin and the larger general market have a significant correlation. The S&P 500 and NASDAQ-100 experience more volatility as the Federal Reserve intensifies its monetary tightening. As a result, the general market and Bitcoin, which is double connected, are seeing a significant selloff.
The Federal Reserve is facing a swift backlash from market players. Many Wall Street banks claim that the nation's inflation rate has already peaked. Therefore, the severe tightening by the central bank is unneeded. A looming recession is also being blamed on the Fed by experts.
Global central banks have being urged by the United Nations to change course from their harsh monetary restrictions. In a similar vein, the World Bank predicts that a severe recession will hit the world economy in 2023.
However, top Fed officials seem unwavering in their hawkish outlook. The president of the Minnesota Federal Reserve, Neel Kashkari, claimed that he does not believe inflation has peaked. The US Labor Department's unemployment statistics will support the Fed's position. It will cause the price of Bitcoin to decrease even more.
The former treasury secretary is now lending the Fed much-needed support. He thinks that in order to prevent inflation from becoming entrenched into routine, the Fed must fulfil its commitments.
What Economic Plans Does Summer Have?
Summers wants the Fed to emphasise inflation over financial stability, just like he does. He thinks that after the Fed effectively controls inflation, it can deal with a recession.
The Fed must still specify how it intends to combat stagflation, though.
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