BREAKDOWN: Why Markets Viewed the Fed's Latest 75 Basis Point Hike as 'Dovish'
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 28 July 2022
⏱️ 19 minutes
🧾️ Download transcript
Summary
Bitcoin is up more than 10% since the FOMC presser.
This episode is sponsored by Nexo.io, Chainalysis and FTX US.
Yesterday was “Fed Day” and the U.S. Federal Reserve announced its second 75 basis point interest rate hike in a row. Despite the fastest pace of monetary tightening in a generation, markets rallied after Chair Jerome Powell’s presser. On today’s episode, NLW explains why so many in the market interpreted the Fed’s Q&A as dovish, and what it means going forward.
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“The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsors is “The Now” by Aaron Sprinkle. Image credit: Drew Angerer/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.
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Transcript
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| 0:00.0 | Welcome back to The Breakdown with me, NLW. |
| 0:09.2 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:14.8 | The breakdown is sponsored by nexo.io, chain aliasis, and FtX, and produced and distributed by CoinDesk. |
| 0:22.9 | What's going on, guys? It is Thursday, July 28th, and today we are asking, how come markets |
| 0:30.3 | viewed the Fed's latest 75 basis point hike as dovish? Before we get into that, however, if you |
| 0:37.3 | are enjoying the breakdown, |
| 0:38.7 | please go subscribe to it, give it a rating, give it a review, or if you want to dig deeper into |
| 0:43.4 | the conversation, come join us on the breakers discord. You can find a link in the show notes |
| 0:47.9 | or go to bit.ly slash breakdown pod. Lastly, a disclosure as always. In addition to them |
| 0:53.7 | being a sponsor of the show, I also |
| 0:55.5 | work with FTX. All right. So yesterday was Fed Day, the big event that markets hang onto, like |
| 1:04.0 | a kid with Christmas or something. And before we get into what happened, I think we need to do a super |
| 1:10.0 | fast synopsis on where we are. |
| 1:12.4 | We are currently in the midst of the most significant monetary policy shift in a generation. |
| 1:18.4 | The Federal Reserve had up to this week raised rates three times this year, and is doing so at the fastest pace since the 1980s. |
| 1:26.2 | The goal, of course, is to curb the tide of inflation |
| 1:29.6 | before it becomes endemic, and specifically before expectations about future inflation become |
| 1:36.6 | entrenched to the degree that people start acting like inflation will be with us forever. |
| 1:41.6 | The reason this matters is that inflation can be a self-fulfilling prophecy. |
| 1:46.8 | If people expect prices to keep going up over the medium and long term, it makes rational economic |
| 1:52.5 | sense to buy more today before those price increases happen. Indeed, this is clearly on their |
| 1:58.5 | minds. Fast forwarding to the Powell Press conference today, |
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