San Francisco Federal Reserve Bank President Mary Daly has released statements that the Fed should aim to get interest rates up to 2.5% as quickly as possible, including a pair of 50-basis-point hikes. The goal is to bring the economy to a place where the interest rate is not stimulating growth in order to stem the major inflation the economy is seeing.
“You have an election around the corner, inflation spiking out of control, an unstable geopolitical climate in Eastern Europe, and a weak supply chain from continued Covid-related lockdowns. That’s causing gas, electricity, and basic foodstuffs to spike, and it is hurting Americans of every political and ideological stripe. There’s a lot of public outcry to tamp down inflation,” said Gardner.
“I see a couple of 50-basis-point hikes immediately in the next couple of meetings to get there. And then we need to look around and see what else is going on,” Daly said in an interview.
“2% is the goal for inflation, and they’re clearly missing the mark. So, they’re trying to land the economy evenly, almost as you would attempt to land a plane in a windstorm. There’s a lot of turbulence, and you want to slow down the plane without crashing it. That’s the goal, is to slow down the economy so that the supply chain catches up with demand — and they want to do it with as little chaos as possible,” said Gardner.
“However, anybody watching the markets feels the chaos — chaos just from anticipation, at this point. The Fed may have to continue to raise interest rates in order to bring down inflation, so that’s going to scare investors. It already has scared investors,” offered Gardner. “So, when you’re hearing news about dips in the crypto world, that’s only half the story. Traditional markets are feeling the same kind of pain, and the vast majority of it stems from uncertainty and a lack of confidence in the market.”
Modulus is known throughout the financial technology segment as a leader in the development of ultra-high frequency trading systems and blockchain technologies. Modulus has provided its exchange solution to some of the industry’s most profitable digital asset exchanges, including a well-known multi-billion-dollar cryptocurrency exchange. Over the past twenty years, the company has built technology for the world’s most notable institutions, with a client list which includes NASA, NASDAQ, Goldman Sachs, Merrill Lynch, JP Morgan Chase, Bank of America, Barclays, Siemens, Shell, Yahoo!, Microsoft, Cornell University, and the University of Chicago.
“Nobody knows what’s coming. Not the experts. Not even the Fed. It’s possible that the economy begins to right itself quickly. It’s possible that it will undergo further pain. But, as those realities affect the cryptocurrency markets, it is important to keep perspective. A dip in digital assets isn’t a sign to bail. It is a sign to ensure that you’re invested in quality projects with long-term potential. Because, once the inflation is gone, the fundamentals still will survive that. I think that, as individual asset prices become more volatile, you’ll see greater interest in cryptocurrency derivatives, which can mitigate the risk coming from swings in any one asset. I think that’s a move you should watch for within the industry,” said Gardner.
