#CryptoMarketBouncesBack

Fed, Trump, and Bitcoin: Will the call for interest rate cuts affect the market?

While Trump is calling on the Fed to cut interest rates immediately, markets are not expecting any change this week, and investors are focusing on the impact of cryptocurrency and oil.

US President Donald Trump reiterated his pressure on the Fed to immediately lower interest rates and said at a White House meeting that a "special meeting" should be held to cut rates.

Trump stated, "Could there be a better time than now to lower interest rates? Even a third-grade student knows that."

In a tweet on Thursday, Trump reiterated his calls for lower interest rates after the Fed chairman said "interest rates should be lowered IMMEDIATELY."

In January, the President argued that the US should have "significantly lower" interest rates and "the lowest in the world," calling Powell "too late" and claiming that maintaining high interest rates was "harming our country and national security."

Trump advocates for lower interest rates to reduce the cost of servicing the massive $39 trillion US national debt and to stimulate economic growth, the housing market, and the stock market.

Lower interest rates could drive investors towards higher-risk assets like stocks and cryptocurrencies. Cheaper borrowing costs also increase overall market liquidity, meaning more money flows into speculative assets.

No interest rate change is likely at the Fed's Wednesday meeting.

The US central bank begins its two-day meeting in March on Tuesday and is expected to announce its interest rate decision on Wednesday.

However, futures markets paint a different picture, currently showing a 99% probability that rates will remain unchanged this week, between 3.50% and 3.75%.

A similar outlook exists for the April 29 meeting. The probability of no change in rates is at 97%.

This is happening despite expectations that Kevin Warsh, Trump's nominee for Fed chairman who will take over in mid-May when Powell's term ends, may be more open to rate cuts.

The war with Iran has also led to a jump in oil prices. This means higher fuel costs, which are likely to increase inflation by raising the prices of food and other goods through higher transportation costs. This could push the Fed to raise interest rates.

The current inflation rate in the US remained stable at 2.4 percent in February, but is expected to rise in March.

Fed to maintain wait-and-see approach

Jeff Mei stated that due to the US-Iran conflict's effect on boosting oil prices, "investors have already priced in the possibility of zero interest rate cuts this year."

According to Mei, this should mean "less downward pressure on crypto asset prices" since the impact of oil on inflation is "not clear at this stage." Furthermore, the Fed will likely choose to "continue monitoring the situation."