admin • Prof. Jeremy Siegel of the Wharton School of Business predicts a disaster if the Federal Reserve raises interest rates by 50 basis points on February 1, 2023.
• Economists expect the FED to increase interest rates by 25 basis points to 4.75%, up from 4.50%, on February 1, 2023.
• Falling inflation and rising crypto and Bitcoin prices are two of the factors the FED will consider when determining interest rates.
The United States Federal Reserve (FED) is expected to make a decision on February 1, 2023, regarding interest rates. Jeremy Siegel, the Wharton School of Business Professor, has warned that a 50 basis points hike would be a ‘disaster’ for the crypto and legacy markets.
The FED began raising interest rates in January 2022, and have increased the prevailing interest rate in the United States from 0.25% to 4.50% by the end of the year. The current expectation is that the FED will increase interest rates by 25 basis points to 4.75% on February 1, 2023.
Professor Siegel believes that the FED should change its statement’s wording and explicitly mention that the monetary policy decisions over the past months have been effective. He believes that this would reassure the market that the FED is nearing the end of its tightening cycle.
The FED will consider multiple factors when deciding on the current interest rate, including labor conditions, inflation, and the overall economic climate. Inflation is a particularly important consideration, and recent figures show that inflation is falling. At the same time, the prices of crypto and Bitcoin are on the rise, and this could be an additional factor that the FED takes into account.
It is impossible to predict how the FED will react, but Professor Siegel’s warning should not be taken lightly. A 50 basis points increase could have far-reaching consequences, and the crypto and legacy markets could see a spike in volatility in the hours leading up to the FED’s decision. Investors and traders should be prepared for any eventuality.