Stronger growth is welcome and will not dissuade the Fed from considering rate cuts

by Tiffany Wang, WOO Analyst

As expected, the Federal Reserve opted to maintain its benchmark rate on Wednesday. US employment data continues to show strength, with positive revisions to previous Non-Farm Payrolls (NFPs) and notably favorable figures for January, sparking speculation about the true restrictiveness of the current US monetary policy.

With the Federal Funds Rate at 5.25% and the core Personal Consumption Expenditures (PCE) annualizing at 2%, short-term real interest rates stand at over +3%. Despite the potential for a restrictive environment, consumer spending remains robust, and the private sector continues to create jobs at a satisfactory pace.

While there's a possibility of a higher equilibrium rate, indicating the Fed might delay or minimize rate cuts, Federal Reserve Chairman Powell has been clear in asserting that stronger growth is welcome and will not dissuade the Fed from considering rate cuts. The primary implication is that if the natural rate of interest and equilibrium rates are indeed higher, any cutting cycle initiated by the Fed will likely be less pronounced.

Crypto and blockchain events this week

Meanwhile, here are the biggest crypto and blockchain events happening around the world this week so that you can stay informed.

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