Reserve

United

World

<ul class="list-ic vertical"> 
 <li> 1 <a>The world has seen repercussions of aggressive interest rate hikes of the U.S. Federal Reserves.&nbsp;</a> </li> 
 <li> 2 <a>Fed increased the rates by a staggering 525 points from zero since March 2022 till date.</a> </li> 
 <li> 3 <a>The JPMorgan CEO thinks if the interest rate reaches the 7% ceiling, it will be devastating.&nbsp;</a> </li> 
</ul> 
The interest rate hike by the United States central bank since last year has sent ripple waves to the financial markets worldwide. Following their start, the interest rate increase affected the performance of companies and experts have raised concerns. Jamie Dimon, CEO of JPMorgan, has reportedly expressed concerns about the global economy’s readiness to handle a worst-case scenario involving U.S. interest rates rising as high as 7% alongside stagflation. 
As reported by Bloomberg, Dimon suggests that the Federal Reserve may need to continue raising interest rates to combat ongoing inflation, and further increases in borrowing costs could have more detrimental effects on the global economy. 
The U.S. Federal Reserve has increased the benchmark interest rate by 525 basis points since March 2022. The increase brought it to the 5.25%-5.5% range which was said to be an effort to combat inflation.&nbsp; 
This instance of economic tightening was among the factors that contributed to the crypto market crash that occurred last year. The damage did not remain limited to the crypto only as the banking sector also had to suffer through it. However, the repercussions were visible this year when some of the prestigious <a href="https://www.thecoinrepublic.com/2023/03/16/why-signature-bank-collapsed-and-how-does-it-affect-crypto/" target="_blank" rel="noopener noreferrer nofollow">banking institutes</a> saw their decline.&nbsp; 
The JPMorgan executive points out that the gradual increase from zero to 2% was manageable, and even the jump to 5% was within expectations. However, he expresses uncertainty about whether the world is prepared for the possibility of interest rates reaching 7%. 
He emphasizes that if lower trading volumes coincide with higher interest rates, it could create stress in the financial system. 
Dimon’s concerns are that if the U.S. interest rates were to rise to 7%, especially in the context of stagflation or persistently high inflation and joblessness, it could increase the risk of the U.S. economy slipping into a recession. This would not bode well for risk assets such as technology stocks and cryptocurrencies. Additionally, the ongoing tightening of rates could push U.S. Treasury yields to multi-decade highs, making bonds more appealing and potentially diverting capital away from riskier investments. 
The remarks of the JPMorgan CEO are at odds with the prevailing sentiment that the Federal Reserve’s tightening cycle has reached its zenith. The Fed has expressed its intention to maintain higher borrowing costs for an extended period, signaling that further rate hikes could be on the horizon. 
Rather, many expected that the American central bank may reverse the process and start decreasing the interest rates soon. However, the Fed indirectly denied any such possibility to take place anytime in the near future.&nbsp;

Federal Reserve’s 7% Interest Hike, Is World Ready: JPMorgan CEO

Thecoinrepublic.com

Other articles published on Sep 27, 2023

Unlocking the Ultimate Guide: Finding the Top Casino for a Thrilling Crash Game Experience

US Dollar Reaches 10-Month High, Weakens BRICS Currencies

Automated Trading Revolution: BingX Teams Up With WunderTrading to Unlock Effortless Crypto Inves...

Russia Allocates 5.2 Billion Rubles for AI Technology Development in 2024

The Arrival of Crypto-Native Staking Rates: A Monumental Innovation Set to Unleash Economic Growth

The SEC Drops the Hammer on Crypto: How Will the Industry Adapt to Avoid Extinction?

Join our free newsletter for daily crypto updates!