The Federal Reserve continues its hawkish stance to curb inflation. The consumer price index for August revealed worse-than-expected inflation. The Fed reaffirmed its commitment to curbing inflation prices by moving forward with a jumbo hike of 75 bps. More importantly, Fed chair Jerome Powell seemed to move away from his past comments about a soft landing.
The crypto community is bracing for another crash as prices continue to fall with now bottom. Ethereum fell below the $1.3K mark while Bitcoin is swinging in the $18K – $19K range. In the last 7 days, most of the altcoins have been trading in the red.
Is A Soft Landing Possible
The Fed moved forward with another 75 bps hike. More importantly, it is unlikely that the Fed is likely to pivot any time soon. Even bullish market participants, like Marko Kolanovic, expect a 100 bps mega hike before the end of the year.
The Fed wants to bring the inflation level down to under 2%. Even the Fed’s prediction reveals it will take till 2025 to reach this target. Major macroeconomics expert, @MacroAlf, highlights on Twitter that the five largest economies in the world are experiencing the fastest slowdown in credit creation. He does not believe a soft landing to be at all likely.
Lisa Abramowicz of Bloomberg TV highlights that Fed chair Powell is moving away from his prediction of a soft landing. Powell believes that stable prices are the fundamental elements of a functioning economy. The Head of trading at Hindsight mutuals reveals that this is the worst FOMC of all. He explains that he questions the entire idea of a soft landing.
Is A Recession Possible
The likelihood of a recession increases by the day as the Fed continues its hawkish stance. The World Bank has already issued a warning for a recession as soon as the next year. The US has already had two consecutive quarters of negative growth. Experts believe that it is extremely likely that a third negative growth quarter will be revealed.