Fed Official Dismisses Imminent Rate Cuts
John Williams, President of the Federal Reserve Bank of New York, has pushed back against the market’s expectation of imminent rate cuts. In an interview on CNBC, Williams stated, “We aren’t really talking about rate cuts right now.”
This contradicts the Fed’s earlier statement that peak rates have likely been achieved, leading to speculation of rate cuts in 2024.
The market had reacted positively to the Fed’s Federal Open Markets Committee meeting, with the Dow Jones Industrial Average reaching a record high. However, the index remained flat following Williams’ comments.
While equities processed the different messages from the central bank, the dollar experienced a mild recovery after a sharp decline earlier in the week. Analysts anticipate a potential correction for the dollar if rate cuts occur in the first quarter of 2024.
Crypto Market Experiences Correction
Bitcoin (BTC) and ether (ETH) both dipped around 3% on Friday, extending the correction that began earlier in the week. Despite this correction, both cryptocurrencies are still on track to end the year with significant gains. Year-to-date, bitcoin is up 151% and ether has seen an 87% increase.
The flash crash earlier in the week coincided with an overly bullish market sentiment. Analysts from Cycles Edge noted this sentiment shift in a recent report.
Focus on Core PCE Index Release
Traders will be closely monitoring next week’s release of the core Personal Consumer Expenditures (PCE) index. The Fed has adjusted its 2024 core PCE to 2.4%, which remains above the central bank’s 2% target but represents a significant decline from the previous month’s 3.46% year-over-year increase.