The Fed's willingness to increase the rate "until the bitter end" is, in theory, no longer news to anyone. However, after learning the GDP figure for the first quarter, international analysts started to express concern about a potential recession. At the same time, we are discussing a recession affecting not only the US but also Europe, the UK, and the rest of the world. Although there is a chance of a recession, Jerome Powell underlined in his speech last week at the economic forum in Sintra that the American economy is strong and prepared to weather it if required. He added that the Fed could temporarily ignore the downturn in the American economy because the main objective is to get inflation back to the desired level. So far, all indications point to the Fed raising the rate until it observes a significant decrease in inflation. It turns out that the economy has a greater chance of avoiding a recession the quicker inflation begins to decline. Because GDP is still mostly computed in annual terms, the recession is likely already underway. Therefore, if inflation shows the required deceleration rates in the upcoming three to four months, the US economy may start to level out on schedule and not see annual losses.
Most experts concur that the Fed rate will start to drop in 2019. This scenario predicts that it will be at least 3.5% and that there will be ample time for inflation to at least halve. If this occurs, the rate may slow down even more due to inertia, negating the need for an aggressive monetary strategy and allowing it to return to a neutral level between 2.5 and 2.75 percent. As a result, we think that it will be possible to anticipate monetary policy softening no earlier than next year. This time frame has the potential to signify the conclusion of the "bearish" trend in both the US stock market and the cryptocurrency sector. Where would the important equities, stock indices, and cryptocurrencies be at that time is another query. The cryptocurrency market might experience a total loss of up to 90% if the US stock market can adjust by another 15-20% and then finish moving south. And according to some experts, it won't decline by nearly 99 percent. Cryptocurrencies often have a greater potential for loss than stocks. However, a moment will come when investing in digital assets seems advantageous and promising.
