Higher (inflation) for longer: moving away from quantitative tightening

FOMC meeting review, June 2024

The Federal Reserve didn't cut rates at the FOMC meeting last week. But that doesn't mean the US monetary policy isn't slowly drifting away from QT.

And that's happening despite inflation settling at a higher level that before the COVID pandemic in 2020. 

Like the ECB, the Federal Reserve is giving up on fighting inflation. 

The shift away from QT will directly benefit Bitcoin and crypto in the short term. But the actual reason the Fed is taking this path is what's going to shape Bitcoin in the coming decade.

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Higher (inflation) for longer

The takeaway

The monetary policy of the US is heading out of quantitative tightening. The Federal Reserve is now making that clear in its communication. 

And they are doing so before they have achieved their goal to reduce inflation to its pre-COVID level.

The reason? They need to help getting interest expense on the US debt under control.

At the rate at which the US Treasury is issuing debt, this problem is going to dominate monetary policy concerns in the coming decade. And one of the best way to hedge against it is to be long Bitcoin.

The Federal Reserve is becoming less hawkish