Important points
- Federal Reserve President John Waller has signaled multiple interest rate cuts in 2025, given promising inflation data.
- Bitcoin soared above $99,000 on higher-than-expected inflation, and altcoins rallied strongly as traders eyed a break above $100,000.
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Federal Reserve President Christopher Waller has signaled multiple interest rate cuts in 2025 if inflation continues on its current disinflationary trend.
“The inflation numbers we got yesterday were very good,” Waller said on CNBC Thursday, pointing to the latest data showing price pressures subside.
He added that if similar inflation figures continue to be released, it is reasonable to expect a rate cut in the first half of this year, and could happen as early as March.
Waller also suggested that future rate cuts could be higher than current market expectations if inflation falls in line with December's positive data.
The yield on the two-year Treasury note, which closely reflects the Fed's policy changes, fell to 4.25% following Waller's comments. The market currently expects interest rates to fall by 40 basis points in 2025, up from 34 basis points previously.
Waller cautioned that the pace of cuts remains dependent on data. “If the data doesn't match, we're going to go back to two, and maybe even back to one.” [cut] But only if there is severe inflation,” he said.
The labor market continues to influence the Fed's outlook, with recent data pointing to steady job growth and a decline in the unemployment rate by the end of 2024. Waller characterized the labor market as “robust, not booming.”
Bitcoin reacted positively to Wednesday's CPI release, consistent with Waller's optimistic inflation outlook.
The asset briefly crossed the $100,000 resistance level and has been trading between $98,000 and $100,000 in the past 48 hours, with Bitcoin still able to break through and maintain the $100,000 mark. I'm having a hard time.
This level has been a psychological barrier and has proven difficult to maintain since Bitcoin first reached it in early December. Bitcoin dipped below $90,000 earlier this week, but better-than-expected inflation data reignited bullish sentiment and sent the price up again.
Since Monday, Bitcoin's market power has fallen to 57%. Alternative digital assets recorded gains, with Solana up 8% and XRP 15% in the past 24 hours.
Meanwhile, DXY is still trending lower, but still higher than it was in the month before Donald Trump's election victory.
As observed during his first term after the 2016 election, DXY initially rose and then fell in 2017, but many expect it to fall once President Trump takes office.
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