Source: The Kobeissi Letter/X“Effectively, the Fed must pick between containing either inflation or unemployment,” it summarized, calling the situation the Fed’s “worst nightmare.”A key issue is the extent and timing of any interest rate cuts — something that crypto and risk-asset traders are keenly eyeing thanks to the positive knock-on effect for markets.“Not reducing interest rates will further weaken US GDP and likely increase unemployment.
Source: CME GroupCrypto trader, analyst and entrepreneur Michaël van de Poppe predicted that recession alone would cause the Fed to rethink its stance.“The rumours for a potential recession is increasing, which should strengthen the thesis for the FED to loosen up the policy,” he wrote in part of an X reaction to Q1 GDP data. “That will likely be a low on the markets, liquidity to be added and risk-on to thrive.”This article does not contain investment advice or recommendations.
Thus in a “lose-lose” situation, the Fed faces the threat of both stagflation — rising inflation with rising unemployment — and a full-on recession.“A recession in the US has become our base case scenario,” Kobeissi added, linking to rising odds on prediction service Kalshi.
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Author / Journalist: Cointelegraph by William Suberg
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