The U.S. presidential election has entered the final four months, and the battle between former U.S. President Donald Trump and current U.S. President Joe Biden, representing the Republican Party, is heating up.
But since Trump was shot last weekend, his support and exposure have soared rapidly in the community. Because of his pro-cryptocurrency stance, it has also stimulated the rise of Bitcoin, betting that Trump's victory will create a regulatory environment conducive to the growth of cryptocurrency.
Analyst: Trump's election may trigger global inflation again
In addition to the possibility that Trump will provide a friendly regulatory environment for cryptocurrencies, another possibility that the market generally believes will boost the sharp rise of cryptocurrencies is that the Federal Reserve is about to start cutting interest rates after maintaining a long-term high interest rate policy.
However, according to a report by the US financial media "CNBC" yesterday (17th), many analysts pointed out that the high tariffs and low tax economic policies introduced by Trump before when he was in office were themselves prone to triggering inflation. Now if he is re-elected , his America-first policy may continue to push up costs around the world and trigger a rebound in inflation.
In this regard, Michael Metcalfe, head of macro strategy at State Street Global Markets, said:
The policies introduced by Trump in his second term are more likely to trigger more severe inflation than in his first term.
Compared to 2016, when inflation was low and inflation expectations were low... 2024 and 2025 will be very different. Inflation is higher, inflation expectations are higher, and we are still in this inflationary mindset.
In addition, Nomura analyst Gareth Nicholson also said that if Trump is elected, his policies will also have an overall negative impact on Asian stock markets:
From a macro perspective, this will bring inflation (perhaps even stagnant inflation) to the global economy and will accelerate more supply chain shifts within Asia.
Trump Treasury Secretary nominee: Fed should be patient in cutting interest rates
On the other hand, Trump has already stated that if he wins the election, he will consider inviting JPMorgan Chase CEO Jamie Dimon, known as the most powerful banker in the United States, to serve as Treasury Secretary.
However, although Fed Chairman Jerome Powell has recently hinted that an interest rate cut may come soon, Dimon recently pointed out that the Fed needs to remain patient when making decisions at the next interest rate meeting, suggesting not to cut interest rates too quickly:
Inflation is heading in the right direction, but it would be better if the Fed waited.
I believe that there are many factors that may lead to another rise in inflation in the future, including expansion of government spending, military competition in the world, adjustments to trade institutions, and massive investment in the green economy.
At the same time, Trump also recently directly warned that the Federal Reserve should avoid cutting interest rates before the November election:
Maybe the Fed will cut interest rates before the election, before November 5th, even though they know they shouldn't.
Trump pointed out that interest rates must be maintained at current levels until economic conditions change significantly. He believes that although some people hope to lower interest rates to stimulate the economy, under the current circumstances, this is very difficult.
To sum up, if as analysts say, inflation will rebound after Trump takes office, which may hinder the pace of interest rate cuts by the Federal Reserve. If high interest rates are maintained for a longer time, then Bitcoin and other cryptocurrencies will Whether it can still rise is still a question mark?
