Trade Tensions May push Fed to Hike Rates, Impacting Crypto
Komal Sri-Kumar, head of Sri-Kumar Global Strategies, believes U.S.-China trade tensions could lead the Federal Reserve to raise interest rates. This move is usually bad for cryptocurrencies and other risky investments.
On CNBC’s “Power Lunch,” Sri-Kumar argued that rising inflation risks make a rate hike necessary. he doubts the trade war is close to ending, urging the Fed to stay cautious. This contrasts wiht the growing belief that the Fed will cut rates to boost the economy. Crypto.news analyst Crispus Nyaga noted that rate cuts are typically good for Bitcoin and other assets. However,a rate hike could cause more market volatility.
Sri-Kumar thinks the Fed must be alert due to ongoing trade issues. He sees the Fed as needing to act independently, despite White House pressure. Fed Chair Jerome Powell, with a year left in his term, faces a tricky situation. Historically, rate cuts have been positive for Bitcoin. Yet, a hike could strain relations with the White House, which might pressure Powell, despite his independence.
trade talks show the U.S. has softened its stance without getting concessions from China. This unpredictability could affect the economy. Historically, rate cuts have been beneficial for Bitcoin. But a hike could cause friction with the White House, which once considered removing Powell.
Trade talks are unclear. The U.S. has reduced tariff threats without China making critically important concessions.
Manufacturers remain wary of potential new tariffs. Sri-Kumar warns of continued market uncertainty. He advises investors to prepare for volatility from geopolitical shifts and the Fed’s challenging economic navigation.
