Fed President Warns Of Volcker Like Extreme Measures To Tackle Inflation

There is no possibility of a bullish trends in Bitcoin and Ethereum Values. BTC values have tanked close to 10% while the number two crypto-coin, Ethereum has declined by 11%. The signals from the Fed are hinting that situation is going to worsen as the recession fears start to loom.

In an interview with Neel Kashkari, the President and CEO of the Federal Reserve Bank of Minneapolis, in an interview said that the Fed will have to take action under the Volcker rule.

The Volcker Rule is a controversial rule which intends to protect the interests of the bank customers and prevents the banks from investing in highly volatile assets. It was brought into force just after the 2007-08 financial crisis. However, the rule is controversial and often leads to a financial crunch and liquidity starvation.

Why Fed Inflation Fear Will Lead To Another Crypto Winter

The Fed is primarily responsible for reining in inflation and it achieves this by tweaking the interest rates. The Consumer Price Index was high in June and it led to unusual hike in the interest rates from the Fed. A blood bath followed in the market and also in the crypto currency sector.

Bitcoin(BTC) which is intricately linked with the traditional and technology stocks lost much of its values and crashed in what was later to be known as the crypto winter.

In the month of July, a higher-than-expected CPI did create the same mayhem as before and many experts believed that the fear of inflation was already priced in. There is indication that the prices of key commodities will come down and the inflation will also cool down.

Then the month of August the CPI figures once again confirmed the notion that the market is cooling down and there was a rally in the prices of crypto sector. The expectation was high that the Fed will get over its fears of recession.

However, the latest narrative by the Fed on a “Volcker-esque” stance will undo all the recovery in the Crypto Sector. The tone is reminiscent of the hawkish stand by the Fed chief Paul Volcker which pushed the economy into recession. Neel Kashkari reveals that it will be an unwise act to unleash a fear of inflation.