- Stocks and the cryptocurrency market fell sharply following Bullard’s comments.
- Bullard is not qualified to vote on the FOMC this year.
The President of the St. Louis Federal Reserve, James Bullard, has pushed for a higher interest rate increase and remains open for a more aggressive move, per multiple reports. The policymaker advocated for half-point increase in the interest rate during the last meeting and wouldn’t mind repeating the same in the next meeting in March 2023.
Bullard did not act in isolation, as the Cleveland Fed President Loretta Mester also advocated for rates higher than what was approved by the Federal Open Market Committee (FOMC). Neither Bullard nor Mester succeeded in their advocacy, as the FOMC only approved a quarter-point interest rate.
While explaining his advocacy, Bullard stated that increasing interest rates could help lock in a deflationary trend in 2023. According to him, this is possible despite the ongoing growth and strong labor markets.
Following Bullard’s statement, the stocks and the cryptocurrency market fell sharply. The Dow fell more than 400 points, reflecting a 1.3% loss, while the S&P 500 dropped by 1.4%, and Nasdaq fell by 1.8%.
The cryptocurrency market was also affected by Bullard’s comments, with Bitcoin making an about-turn from its surge earlier in the day. After rallying to $25,270, Bitcoin price reversed to close as low as $23,520, reflecting a 7.05% drop from the day’s high.
Apart from Bitcoin, the altcoin market also joined in the decline. Ethereum, the second-largest cryptocurrency by market cap dropped from a daily high of $1,742 to close at $1,638, marking a 6.04% loss while other altcoins like Cardano, Polygon, and Dogecoin all fell by 8.44%, 6.55%, and 7.63% respectively.
The impact of Bullard’s comments appears to have dissipated, as most cryptocurrencies have found support after the drop. Following the drop, the market bounced, attempting to resume its trend before the events that led to the pullback.
It is important to note that neither Bullard nor Mester is qualified to vote on the FOMC this year.