In a recent speech at Stanford University, Federal Reserve Chair Jerome Powell refrained from commenting on monetary policy, providing a temporary sense of relief to the markets. This decision comes against the backdrop of an unclear stance on potential rate cuts during the December meeting, urging investors to maintain a cautious approach. Despite the prevailing uncertainty, Bitcoin rallied, surging above $87,000.
Powell Sidesteps Monetary Policy Discourse
During his speech at an event held in memory of the late economist George Shultz, Powell surprisingly avoided addressing the current economic conditions or monetary policy. With the statement, “To be clear, I will not talk about current economic conditions or monetary policy,” he maintained a strategic silence as the Fed entered its decision-making week. This conscious strategy aligned with the Fed’s pre-meeting “quiet period” policy, following Powell’s previous message indicating uncertainty about a December rate cut.
The timing of Powell’s speech sparked concerns about potential impacts on liquidity flows, particularly as it coincided with the end of “quantitative tightening.” By opting to remain silent, Powell continued to uphold a deliberate strategy that stirred various market speculations.
Weak Economic Data Fuels Rate Cut Expectations
Recent manufacturing data from the United States has intensified signs of economic slowdown. The ISM Manufacturing PMI fell to 48.2 in November, marking its lowest in four months. As orders declined and price pressures rose, expectations for a 25 basis point cut in December grew stronger, with the CME FedWatch Tool reflecting an 87.2% probability.
Joe Saluzzi, Head of Equity Market Structure Research, expressed his anticipation of a gradual rise through the end of the year when speaking with Reuters. Such sentiments, coupled with White House Economic Advisor Kevin Hassett emerging as a strong candidate to succeed Powell, have heightened expectations for a sustained softer tone in monetary policy.
Following Powell’s composed silence, Bitcoin attracted renewed investor attention, climbing nearly 1% in 24 hours and reaching $87,325. As trading volume remained high, the “buy-the-dip” approach was validated. CoinGlass data further indicated that open positions in futures rose to $57.7 billion, with minor increases at CME and declines at Binance and Bybit suggesting mixed outlooks in derivative markets.