The views of the US Federal Reserve (FED) on the effects of interest policy on crypto currencies and global markets were on the agenda. Charles Schwab’s chief investment strategist Liz Ann Sonders said Fed’s pause at the current interest rates created a positive atmosphere in the markets. Sonders said that investors prefer a stable and controlled Fed management.
Fed’s interest rate decision and market reaction
The Chief Investment Strategist Sonders said that the FED’s decision not to change interest rates is consistent with the institution’s inflation and employment targets. According to SONDERS, neither a low nor high inflation level does not create the necessary environment for interest rate reduction under current conditions. In addition, the unemployment rates follow a stable course.
Liz Ann Sonders gave the following statements in this statement:
“Some of them, the Fed does not reduce interest rates, the markets cause positive. Because they do not submit to political pressure and there is no signal that an interest rate reduction is required in line with their bidirectional targets. Financial conditions are easy, unemployment rate is fixed and even falling. In other words, the current conditions are not suitable for the interest rate reduction.”
Market dynamics and borrowing costs
It is also considered that a possible change in the Fed’s interest policy may be particularly effective on borrowing costs. SONDERS focused on the potential risks of interest rate cuts. He said that a reduction under current conditions can narrow financial conditions more than necessary.
Sonders said the following about the course of interest:
“If the perception of the Fed’s interest rates early, this may lead to an increase in long -term bond rates as last year. This may increase the cost of borrowing for companies and individuals. So it is an incomplete assessment to think that credit rates and mortgage interest rates will fall only by downloading interest rates.”
Confidence element in markets
In general, it is suggested that markets trust the current FED management. It is emphasized that the FED avoiding any hasty policy change considering the current economic indicators is considered positively. For this reason, it is stated that the stability in the financial markets depends on the Fed’s stance away from decisive and political pressures.
According to Sonders, the most important element in the powerful appearance of the markets is that the FED is based on economic indicators. It is also stated that markets support a sustainable and predictable approach rather than instant changes in interest rates.
It is pointed out that 10 -year bond return on the market is essential in determining interest rates. Therefore, the Fed’s interest rate decision may not directly affect borrowing costs. It is explained that the market perceives that the Fed does not go to a policy change under current conditions.
As a result, due to the current policy of the Fed, the lack of interest rate reduction has a positive impact on the markets, and this policy plays an important role in the preservation of financial stability and investor confidence.
Responsibility Rejection: The information contained in this article does not contain investment advice. Investors should be aware that crypto currencies carry high volatility and thus risk and carry out their operations in line with their own research.
