Under pressure from investigations, the Fed's rate cut may be delayed. What does this mean for the crypto market?

According to the latest news, Dutch bank economist Rogier Quadeflihc expressed the view that the investigation into Federal Reserve Chair Powell may delay the Fed’s interest rate cut decision. What is the logic behind this judgment, and how might it impact the crypto market?

Investigation Overview

The cost overruns of the Federal Reserve headquarters renovation project triggered this investigation. According to Quadeflihc’s analysis, this investigation is not just a review of project costs but also a pressure on the authority of the Fed Chair. He believes that this challenge to the Fed’s independence could change the attitude within the Federal Reserve Board.

Policy Impact Logical Chain

Why would the investigation delay the rate cut?

Quadeflihc’s core view is: When the Fed Chair faces external investigation pressure, Federal Reserve governors may adopt a tougher stance to defend the institution’s independence and authority. This means that under political pressure, the Fed might act more cautiously in its policies and even tend to delay the originally planned rate cut.

This logic is not without precedent in history. Central banks, when facing political interference, often emphasize their independent decision-making through policy choices.

Market Expectation Shift

If the Fed indeed delays rate cuts due to the investigation, it implies:

• The US dollar remains relatively strong with higher interest rate expectations, and the dollar index may continue to stay robust
• The attractiveness of risk assets decreases comparatively
• The crypto market, as part of risk assets, may face pressure

Potential Impact on the Crypto Market

The Fed’s policy expectations directly influence the liquidity environment of the crypto market. A delay in rate cuts means borrowing costs stay high, which typically suppresses investors’ allocation to high-risk assets. Cryptocurrencies, being highly volatile assets, are likely to face short-term pressure in this environment.

However, it also depends on how the market interprets this event. If the market views the investigation as political interference rather than a genuine policy shift, the impact may be relatively limited.

Summary

This perspective from Dutch bank provides a new angle for the market: political pressure could become an implicit factor influencing Fed policy. While it remains an institutional analysis, it reminds us to pay attention to the external environment faced by the Fed Chair. It is important to observe whether the upcoming Fed meeting will signal a policy stance change. For crypto market participants, Fed policy expectations are always a key factor influencing market direction, and the development of this event warrants ongoing attention.