Fed meeting is shaping up to be a nightmare for Warsh. Bitcoin might still shine
An aggressive market expectations trap and a strict aversion to forward guidance have backed the Fed chair into a corner, where failing to deliver a hawkish message risks destroying the central bank’s inflation-fighting credibility.
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Summary
- Bitcoin fell nearly 3 percent to $75,800 ahead of the Federal Reserve’s rate decision, after the Senate’s defeat of the Clarity Act weakened another potential source of support.
- Markets have nearly fully priced in a quarter-point rate increase and expect further tightening this year, raising the risk that Fed Chair Kevin Warsh’s remarks will disappoint investors.
- A less hawkish message could weaken the dollar and push long-term Treasury yields higher on inflation and debt concerns, potentially benefiting bitcoin and gold after an initial sell-off.
