US Interest Rates are Likely to Grow Less Than Expected

United States interest rates are touted to grow less than expected, which has got crypto markets onto a slightly more positive sentiment.

The US Federal Reserve has been hiking interest rates this year at the most aggressive pace since the 1980s, but a recent speech from the Fed’s Chairman suggests that they might be considering slowing the interest rate increases as early as the next meeting.

With interest rate hikes starting to slow, many investors wonder what this means for cryptos.

Fed Chairman Suggests Slowing Down the Aggressive Interest Rate Hikes

The US Federal Reserve Chairman, Jerome Powell, recently gave a speech at the Hutchins Center on Fiscal and Monetary Policy that excited the markets. In the speech, Powell hinted that the US Federal Reserve might start to consider lowering the rate at which they will be hiking interest rates with the following remark;“It makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down.”

The US Fed has been hiking interest rates at its most aggressive pace since the 1980s to combat inflation in 2022. After a series of aggressive rate hikes, including a plethora of 75 BPS hikes in the most recent meetings, the current US Federal Funds interest rate now sits at 4% – the highest it’s been since the 2008 financial crisis;

What Decreased Interest Rate Hikes Mean for Crypto

The hiking interest rate caused a significant slowdown in the broader economy’s growth and crypto in general. After Powell made his speech, markets across the board started to soar, with the S&P 500 climbing almost 3% at the moment after the address. The S&P 500 is now up 8.5% over the past month as the market starts to turn optimistic about future rate hikes.

Bitcoin also saw a slight price increase following the speech, but less than the general market.

The next FOMC meeting, where they announce the US Interest Rate hikes, is scheduled for mid-December. If the US Fed decides to pivot on its aggressive rate hikes, then this could cause a shift in sentiment for crypto and lead to an end-of-year rally for the entire market.

With interest rates climbing, borrowing money becomes significantly more expensive. As a result, less liquidity is injected into the market as fewer investors are willing to take a risk.

However, it’s important to remember that the US Federal Reserve will still be increasing the interest rate at a slower pace. The interest rate won’t start to come down for quite some time, especially until inflation starts to settle.

Cryptos to Buy While Interest Rates Stay High

While the interest rates continue to rise, it won’t be easy to find places to invest money. However, there are pockets of the industry that are performing remarkably well – even during the past few weeks of price collapses.