What impact does the Fed's speech last night have on the Digital Money market?

Federal Reserve Chairman Powell testified before the Senate Banking Committee on the semi-annual monetary policy. His main points are as follows:

Inflation has clearly slowed, but it remains above the 2% target, with recent inflation data showing "modest" progress towards the 2% target.

Before the Fed's confidence in inflation consistently heading towards 2% strengthens, a rate cut is not appropriate; premature and excessive easing measures may harm inflation progress. The Fed will continue to make decisions gradually.

Committed to the 2% inflation target, maintaining long-term inflation expectations stability. The labor market is strong, but not overheated.

The risk of achieving employment and inflation goals is being better balanced. The US economy is rising at a 'steady pace'.

Restrictive policies help to bring downward pressure on inflation. There is a risk of reversing the inflation process if restrictions are reduced prematurely or excessively, and reducing restrictions too late or too lightly may excessively weaken the economy and the job market.

The first quarter data 'not supported' has more confidence in the inflation path, which is exactly what the Fed's interest rate cut needs. The GDP growth rate in the first half of 2024 seems to have slowed down.

The operational independence of the Federal Reserve requires a long-term perspective in pursuing its objectives.

In terms of market reaction, the yield of US Treasuries fluctuated but rose during the day, while the Standard & Poor's 500 Index maintained its upward trend.

Traders expect the likelihood of the Fed's first rate cut in September to be slightly higher than 70%, with two 25 basis point rate cuts expected in 2024.

Powell's speech indicates that the Fed's attitude towards inflation remains cautious, emphasizing that policy decisions will depend on the performance of economic data.

There has also been some adjustment in the market's expectations of a rate cut by the Federal Reserve. However, the specific policy direction still needs to follow the subsequent economic data and the longer statements of Federal Reserve officials.

Interest rate cuts are a mid-term Favourable Information that will continue to promote the development of the Digital Money market. Interest rate cuts will be just a matter of time, like ETFs. However, everyone is looking forward to the time when it will be implemented and it is time to cash in.

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