Kansas City Fed President Jeffrey Schmid Takes a Dig at Rate Cut, Will Cryptocurrencies Benefit?

TheNewsCryptoPublicado em 2026-02-12Última atualização em 2026-02-12

Resumo

Kansas City Federal Reserve President Jeffrey Schmid supports maintaining the current lending rate, citing strong economic growth and persistent inflation. He argues that keeping rates high is necessary to curb spending and prevent inflation from rising further. Recent positive job data, including a drop in unemployment, supports the likelihood of a rate pause in the upcoming March 2026 meeting. While lower interest rates typically encourage investment in riskier assets like cryptocurrencies, the current high-rate environment may lead investors toward safer alternatives. Major cryptocurrencies such as Bitcoin and Ethereum are currently trading below key thresholds, though some institutions remain optimistic about the sector's long-term prospects.

Kansas City Federal Reserve President Jeffrey Schmid has come out in support of keeping the lending rate unchanged, at least in the next March meeting. He has based his statement on the grounds of the recent job data. It remains to be seen how investors react when allocating their funds to cryptocurrencies, which are going through turmoil at the moment.

Jeffrey Schmid on Rate Cut

Jeffrey Schmid, the President of Kansas City Federal Reserve, has noted the strong economic growth and sought a tighter monetary policy. He has said that the inflation is still running hot with demand exceeding the supply, adding that leaving interest rates high is needed to discourage spending and investment.

Jeffrey has further stated that further rate cuts could allow inflation to surge for longer, specifically at a time when the economy has a chance to grow above the trend. His statement comes at a time when US President Donald Trump has sought lower rates and Kevin Warsh, the next Fed Chair, has signalled that his policies would be in line with the same.

Rate Cut Paused?

A rate cut pause is plausible, given that the employment data have come out better than expected. According to the Bureau of Labor Statistics, the nonfarm payroll rose by 130k in January 2026, and the unemployment rate dropped to 4.3% from 4.4%.

Oren Klachkin, a notable financial market economist, has said that an extended pause still seems likely. For a quick reference, the US Federal Reserve kept the lending rate unchanged in the January 2026 meeting.

The next meeting is scheduled in March 2026, when it is anticipated that the rate could again remain unchanged. Statements by Oren and Jeffery hint at a strong possibility of no rate cut in March 2026. However, a rate cut in June 2026 is still possible.

What’s For Cryptocurrencies?

Ideally, lower rates enable investors to allocate more funds to cryptocurrencies because their risk appetite is higher. Higher rates negate that intention. Thereby forcing investors to look for safer alternatives, like Gold and Silver at the moment.

Crypto prices are currently below the expected lines. BTC, for example, is trading at $68,029.09, below the $70k mark. ETH, similarly, is exchanging hands at $1,994.87 at the time of writing this article. The value is below the $3k mark.

Nevertheless, JPMorgan earlier expressed that it was bullish on cryptocurrencies following a reduction in the Bitcoin production cost to approximately $77k.

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Perguntas relacionadas

QWhat is the stance of Kansas City Fed President Jeffrey Schmid on interest rate cuts, and why?

AJeffrey Schmid supports keeping the lending rate unchanged, at least for the upcoming March meeting. He bases this on strong economic growth, hot inflation with demand exceeding supply, and the belief that high rates are needed to discourage spending and investment to control inflation.

QAccording to the article, what recent economic data supports a potential pause in rate cuts?

AThe recent employment data supports a potential rate cut pause. The Bureau of Labor Statistics reported that nonfarm payrolls rose by 130k in January 2026, and the unemployment rate dropped to 4.3% from 4.4%.

QHow do interest rates theoretically affect investor behavior towards cryptocurrencies?

ALower interest rates typically encourage investors to allocate more funds to riskier assets like cryptocurrencies because their risk appetite is higher. Conversely, higher interest rates negate this intention, forcing investors to seek safer alternatives like gold and silver.

QWhat are the current price levels of BTC and ETH mentioned in the article?

AAt the time of writing, BTC was trading at $68,029.09, below the $70k mark. ETH was exchanging hands at $1,994.87, which is below the $3k mark.

QWhat was JPMorgan's outlook on cryptocurrencies, as cited in the article?

AJPMorgan expressed a bullish outlook on cryptocurrencies, citing a reduction in the Bitcoin production cost to approximately $77k.

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