The US economy is recovering faster than expected and continued support from the Federal Reserve could create an imbalance in the market in the medium term. It is the position of the President of the Dallas Federal Reserve, Robert Kaplan, who rocked the money markets on Friday, saying the US Federal Reserve should think about curtailing bond purchases.
The beginning of the end of “cheap money”?
In a virtual event organized by the Montgomery Chamber of Commerce, the Fed President said:
“We have now reached a point where I see excesses and imbalances in the financial markets. I think at the earliest opportunity I think it will be appropriate to talk about customizing these purchases. “
The FED has bought $ 120 billion worth of bonds every month while keeping interest rates at record levels.
By maintaining an “accommodative monetary policy environment” they stepped in directly and provided a cushion against the eroding effects of the coronavirus pandemic.
COVID-19 was a major disruption worldwide that spread to the US, India, Europe, Africa and worldwide, leaving traces of destruction.
However, after more than a year of record lows and accelerated bond purchases – or QE – Robert believes the economy is warming. He notes rising real estate prices, tight credit spreads and a stock market at historic levels.
Bitcoin roars over fears of inflation
His comments coincided with a sharp rise in the price of Bitcoin.
For most of the week there were doubts about the coin’s uptrend.
Before bitcoin prices dropped above $ 57,000 in the New York session, they were below $ 55,000 and fell slightly below $ 54,000 as altcoins, especially ETH, galloped higher.
With the economy resilient and the Fed meeting its full employment and inflation targets, the inevitability of what the central bank calls “temporary spikes in inflation” could be a boost for safe havens like Bitcoin. This could partially explain the BTC expansion and contraction of some altcoins from spot rates.
Bitcoin’s excellent performance, as reported by BTCManager, has been beneficial to receptive public companies that have included the coin as part of their investment strategy.
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