The crypto market moved quickly after Jerome Powell hinted that interest rate cuts may finally come. Many assets moved immediately, and the Shiba Inu price was among the top gainers. According to this post on X, more than just a price chart, this moment reminded many that SHIB’s strength lies in market timing and its loyal community support.
Powell’s Hint Sparks Instant Shiba Inu Price Momentum
When Powell suggested that long-awaited rate cuts may soon be possible, the market responded quickly. Investors waiting for a clear signal rushed to position themselves, and SHIB wasted no time showing its power. The coin’s price surged with a 12% green candle in a quick move that shows how possible rate cut hints from policymakers can send crypto prices soaring fast.
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It was not just a random jump in price but a reminder of how closely tied SHIB is to larger economic shifts. When the Federal Reserve shows signs of easing, money tends to flow into risk assets, and SHIB has proven it can move with conviction. The sharp rise showed that the price can move much more quickly when the proper signals appear and that the meme coin is more active and responsive than many expected.
The move suggests global signals could directly influence the Shiba Inu price. In this case, just a few words from Jerome Powell were enough to spark a strong reaction as his comments spread across markets and caught the eye of traders everywhere. It shows that when there are hints of a possible US interest rate cut, SHIB reacts quickly and moves in to align with the market trend.
The ShibArmy Behind Shiba Inu’s Price Strength
The X post states that price action can be exciting, but its community truly makes SHIB stand out. While price swings often draw attention, Shiba Inu’s true strength lies in its community. The ShibArmy has shown steady support even during uncertain times, and this loyalty helps SHIB stay strong and resilient in the crypto market. Instead of waiting for the world to tell them when to move, the ShibArmy stays active and prepared.
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This strength is not new. From the beginning, Ryoshi’s vision for Shiba Inu was more than charts and numbers; it was about creating a project and a community that could endure and be ready when the world finally noticed. The latest reaction to Powell’s hint reflects that same vision, with holders not simply chasing prices but being committed to the bigger picture.
The ShibArmy understands that charts can rise and fall, but true resilience comes from staying together and believing in the long-term story. Powell’s possible rate cuts may have lit the spark for the latest surge, but the community’s loyalty keeps the fire burning. As others wait on the sidelines for more signals, SHIB’s supporters repeatedly prove they are always ready for what comes next.
How should a retail investor deal with Wednesday’s interest rate cut by the Federal Reserve and with the future rate cuts that seem to be on the horizon?
What I plan to do is nothing. Which may be what you should do too.
How can I say “do nothing” when the airwaves, print media, and the internet are filled with advice and suggestions — and warnings — about how to handle the Fed’s rate cut?
Let me show you why my wife and I aren’t planning to do anything about the rate cuts, which will reduce our interest income but not threaten our overall financial well-being. And why you may not want to do anything, either.
Here’s the deal. The Fed has cut the federal funds rate to between 4.5% and 4.75% from the former 5% to 5.25%. Fed Chairman Jerome Powell has made it clear that the Fed is planning at least one more rate cut this year.
8/29/24
The Fed controls only this short-term rate, but lowering it puts downward pressure on longer-term rates as well. That’s great, of course, for many of us, making it easier and cheaper to borrow. But it’s not great for savers. That’s because the income they get on their savings is going to decline.
We have significant cash holdings, which we keep in low-cost, high-quality money market funds. Our income from those funds, which has risen nicely over the past few years, is going to decline. But such is life.
Some people advise you to lock up yields by switching cash into long-term bonds or long-term certificates of deposit, whose interest rates are fixed and won’t fall because of the Fed’s rate cuts.
However, there’s a problem with doing that.
Locking up yields by buying long-term bonds or CDs makes your money illiquid. This exposes you to some long-term risks, such as having to sell at a loss if rates rise — which they will sooner or later, trust me —or if you need the cash that you’ve locked up long-term.
Money market man? Federal Reserve Bank Chair Jerome Powell (Photo: Chip Somodevilla/Getty Images) (Chip Somodevilla via Getty Images)
By contrast, if you’ve done what we have done — put our surplus cash into well-regarded, low-cost money market funds — your income will go down when the Fed’s rate cuts work their way through the financial system. But you’ve still got liquidity, the ability to access your cash on demand, which is very important.
The one thing that I won’t do — and that you shouldn’t do, either — is to put my money into a bank savings account, which typically pays yields approaching zero. The rates on those accounts aren’t likely to fall much, if at all, because they’re already so low.
So if you’ve got $3,000 or more of cash sitting in a bank savings account but don’t have a money fund account, you’ll probably do well to open an account in a low-cost, high-quality fund.
To be sure, unlike bank accounts, money funds aren’t backed by the Federal Deposit Insurance Corp. But there are plenty of high-quality, conservatively run low-cost funds. It’s a very competitive business, with $6.68 trillion in assets, according to Crane Data. They are highly unlikely to fail.
The most important thing for you to do now is to stay calm and remember that if you end up doing nothing to cope with lower interest rates, you’ll have plenty of company. Including me.
Berkshire has since rallied and outperformed the S&P 500.
At Thursday’s market close, Berkshire was up 253% (15.6% a year) since we bought it. During that same period, the index fund has returned 242% (15.2% a year), according to Jeff DeMaso of the Independent Vanguard Adviser.
Score one for the Oracle of Omaha.
Allan Sloan, a contributor to Yahoo Finance, is a seven-time winner of the Loeb Award, business journalism’s highest honor.
Powell did not say when rate cuts would begin or how large they might be, but the Fed is widely expected to announce a modest quarter-point cut in its benchmark rate when it meets in mid-September.
“The time has come for policy to adjust,” Powell said in his keynote speech at the Fed’s annual economic conference in Jackson Hole, Wyoming. “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
His reference to multiple rate cuts was the only hint that a series of reductions is likely, as economists have forecast. Powell emphasized that inflation, after the worst price spike in four decades inflicted pain on millions of households, appears largely under control:
“My confidence has grown,” he said, “that inflation is on a sustainable path back to 2%.”
What’s the U.S. inflation rate?
According to the Fed’s preferred measure, inflation fell to 2.5% last month, far below its peak of 7.1% two years ago and only slightly above the central bank’s 2% target level.
The Fed chair also said that rate cuts should maintain the economy’s growth and sustain hiring, which slowed last month. Continued growth could boost Vice President Kamala Harris’ presidential campaign, even as most Americans say they are dissatisfied with the Biden-Harris administration’s economic record, largely because average prices remain far above where they were before the pandemic.
“We will do everything we can,” Powell said, “to support a strong labour market as we make further progress toward price stability.”
By cutting rates, he said, “there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labour market.”
Investors are on edge this week as Federal Reserve officials prepare to signal how many interest rate cuts are still likely in 2024.
Most market watchers believe policymakers will dial their expectations back. The question is by how much.
The new projection on Wednesday will come in the form of a so-called “dot plot,” a chart updated quarterly that shows the prediction of each Fed official about the direction of the federal funds rate.
In March, the dot plot revealed a consensus among Fed officials for three cuts. Now that projection is in question following a string of sticky inflation readings, cautious commentary from Fed officials and a US labor market that added more jobs than expected in May.
Most investors now expect little more than just one cut for 2024.
“I think the policy path will change a bit,” said former Kansas City Fed president Esther George, who predicts the median among 19 policymakers could drop to one cut even as a healthy number of officials still argue for two.
“My expectation is the dots will show and confirm what I think the market has picked up, and that is fewer rate cuts with the inflation forecast holding.”
Federal Reserve Chair Jerome Powell. REUTERS/Amanda Andrade-Rhoades (REUTERS / Reuters)
Fed Chair Jay Powell and his colleagues on the Federal Open Market Committee have been emphasizing they want to be sure inflation is moving “sustainably” down to their 2% target before starting cuts, and that in the interim they expect to hold rates higher for longer.
That stance isn’t expected to change this week. Officials are widely expected to hold the Fed’s benchmark rate steady on Wednesday, leaving it at a 23-year high.
A mixed picture
Policymakers are expected to stay cautious because the latest readings on inflation and the economy offer a mixed picture.
The labor market added 272,000 nonfarm payroll jobs in May, significantly more additions than the 180,000 expected by economists, but the unemployment rate rose to 4% from 3.9%.
Prices aren’t accelerating as much as they were during the first quarter, but recent readings also don’t show enough progress for the Fed to start cutting.
The year-over-year increase in the Fed’s preferred inflation gauge — the “core” Personal Consumption Expenditures index — was 2.8% in April, unchanged from March.
Another complication is that wages are showing resilience, as well. Wage growth was stronger than expected in May, clocking in at 4.1%.
Fed officials will get a fresh reading from another inflation gauge, the Consumer Price Index (CPI), just hours before concluding their policy meeting this Wednesday. It is expected to show continued moderation during May after an encouraging April.
The year-over-year change in so-called “core” CPI — which excludes volatile food and energy prices the Fed can’t control — is expected to edge down a tenth of a percent to 3.5%, compared with 3.6% in April and 3.8% in March.
A 3.5% print on CPI may not be enough to inspire confidence at the Fed, according to George.
“I think it’s just going to take them quite a bit longer to figure out what the trend is,” George said.
Betting on September
Powell has made clear that he thinks the Fed will need more than a quarter’s worth of data to make a judgment on whether inflation is steadily falling toward the central bank’s goal of 2%.
The September meeting is viewed by many as an optimistic case for cutting rates since the three inflation reports due out between now and then would all need to show improvement for the central bank to pull the trigger.
In the meantime, investors expectations for the number of rate cuts this year have swung wildly.
Odds for a first cut in September fell to roughly 52% following the hotter-than-expected jobs report released Friday, and wagers for a second rate cut dwindled to little more than a 38% chance in December.
Traders will be listening for any clues on the Fed’s interest rate path this Wednesday as Fed chair Jay Powell speaks. (Photo by Michael M. Santiago/Getty Images) (Michael M. Santiago via Getty Images)
Luke Tilley, chief economist for Wilmington Trust, is more optimistic. He expects the central bank will have enough data to change its tune by its policy meeting on July 31.
The inflation data in the first month of the second quarter has helped calm fears about hotter readings in the first quarter, he said, and the CPI data out Wednesday will offer further reassurance.
“By the time July 31st comes around, they’ll have three more months of inflation data,” Tilley said. “I think they’ll be back on the front of their feet and off their heels and ready to cut. But it really comes down to how that data comes out.”
Wednesday will also bring other new Fed projections for investors to digest this week, as policymakers will also offer fresh forecasts for inflation, the economy and unemployment.
And there will be the usual high level of scrutiny on whatever Powell has to say at his regular press conference following the meeting.
Wilmer Stith, bond portfolio manager for Wilmington Trust, is looking to see whether Powell takes a more hawkish tone.
“Is he going to be like a [Minneapolis Fed President Neel] Kashkari and other members who say we need to be higher for longer?” says Stith.
“It’s hard to say because if we continue to get the economic growth and the labor market strength that we’ve seen, I don’t even know why they’d want to do one cut.”
Stith said he thinks officials will pencil in two rate cuts. If the Fed only marks down just one, that could add some volatility to markets, he added, even though that is currently what investors expect.
There is a risk the Fed could become too patient in its quest to be sure inflation is dropping, George said. Holding rates this high for too long could also sow the seeds of a recession.
“That’s the risk they’re running here, is to say ‘time is on our side,’” she said.
Investors are increasingly hopeful that the Federal Reserve will start cutting rates in 2024. But those rate cuts may not come as soon they’d hope, according to Innovator Capital Management Head of Investment Strategy and Research Tim Urbanowicz.
Urbanowitz expressed skepticism about the market pricing in multiple rate cuts starting early next year, calling it “very aggressive and quite frankly, not something that you’re going to see until you start to see wages come down at a more meaningful clip.”
Urbanowitz advises investors to focus on “remaining invested in the equity market,” cautioning against going to cash
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