- Waller supports pausing rate hikes if August inflation nears the Fed’s 2% goal.
- Waller urges patience, saying one rate hike won’t quickly bring inflation to 2%.
- Bitcoin’s immediate reaction depends on shifting rate expectations, not the rate itself.
Fed Governor Christopher Waller is pushing back on the idea that a September rate hike is a done deal.
Waller said he’s okay with keeping rates unchanged if August inflation data keeps heading in the right direction toward the Fed’s 2% target. However, he also kept the option of a hike on the table if inflation comes in hotter than expected.
During the central bank meeting, he specifically stated: “Give disinflation a chance. We can wait one meeting. What’s the cost of waiting one meeting? Hiking 25 basis points, one meeting right now, is not going to bring the CPI down to 2%.”
Waller’s comments matter because markets have been getting concerned about a rate hike after some hawkish signals from Fed officials.
The immediate effect on Bitcoin is likely to come through expectations, rather than the Fed rate itself.
In the short run, Bitcoin generally acts like a risk asset that’s rather sensitive to liquidity. If worries about a rate hike fade, yields and the dollar might not push as high, which could help create a better environment for BTC.
Nevertheless, that doesn’t mean Waller’s comments automatically make Bitcoin bullish.
As of September 3, BTC is hovering around $77,000 to $79,000 as traders kept weighing what might happen with interest rates. The cryptocurrency rose about 3% in the last 24 hours.
Considering Waller has tied the September decision more closely to what the upcoming inflation data will show, for Bitcoin investors, that means the next potential big catalyst is likely to be the inflation data itself.
The data the Fed is expecting will come in next week, with the Bureau of Labor Statistics releasing the Producer Price Index data on September 10 and Consumer Price Index data on September 11.
That said, the most favorable scenario for Bitcoin would be if inflation cools and the Fed holds.
Related: The Fed Just Changed the September Trade — Here’s What Moved Markets
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