Coinbase reported that the Federal Reserve is poised to raise interest rates later this year, following remarks from SMBC Chief Economist Joe Lavorgna that core inflation remains stubborn and U.S. economic activity stays robust.
Key Economic Indicators
Recent U.S. data showed inflation easing less than analysts expected, while core price pressures persisted. Retail sales continued to outpace forecasts, and weekly jobless claims stayed at historically low levels, underscoring a tight labor market.
Monetary‑Policy Outlook
Lavorgna recalled the Fed’s 75‑basis‑point policy easing in 2023, which was driven by employment concerns that have since diminished. He argued that the inflation outlook is now more uncertain than it was six to seven months ago, forcing the central bank to consider tightening again.
“Throughout history, inflation has never magically fallen back to the target level in an economy growing at or above the trend level,” Lavorgna warned, adding that the Fed must rely on the federal funds rate as its primary tool. He predicted that the Fed, under the influence of former board member Kevin Warsh, will implement a rate hike before year‑end.
Crypto Market Impact
Higher interest rates typically pressure risk‑on assets, and Bitcoin’s price, which hovered around $27,800, may face downward pressure as investors reassess exposure. Crypto investors are likely to monitor the Fed’s moves closely, given the ripple effects