Fed’s Collins warns higher rates may be needed. What does it mean for crypto? - Crypto News
Federal Reserve Bank of Boston President Susan Collins has warned that higher interest rates may sometimes be necessary to control inflation, despite making housing more expensive across the United States.
In her November 13 speech at the Boston Fed's 70th Economic Conference, Collins acknowledged that tighter monetary policy can hurt homebuyers and construction activity but argued that keeping inflation under control provides lasting benefits for the economy. "In the near term, the higher interest rates sometimes needed to cool the economy and keep inflation in check can make homes more expensive to buy and to build," Collins said.
In the near term, the higher interest rates sometimes needed to cool the economy and keep inflation in check can make homes more expensive to buy and to build.
She added that stable prices create more predictable economic conditions over the longer term, which ultimately benefit the housing market. Her comments come as investors increasingly expect another Federal Reserve interest rate hike in December, with Bitcoin and other cryptocurrencies already under pressure from persistent inflation and weakening institutional demand.
Housing market struggles
During her remarks, Collins pointed to the difficulties facing American households after several years of rising property prices and borrowing costs. She said the surge in home prices since the pandemic, combined with higher mortgage rates since early 2022, has pushed homeownership beyond the reach of many Americans.
The problem has affected businesses as well. According to Collins, employers across New England have struggled to recruit workers because suitable housing is either unavailable or too expensive. She cited cases involving physicians, mechanics, scientists and hospitality workers who withdrew from job opportunities because they could not find affordable places to live.
Housing construction has faced its own difficulties, with some projects slowing or stalling because of shortages of skilled construction workers. Collins explained that monetary policy can have an unusually large influence on housing because both construction investment and mortgage demand are sensitive to interest rates.
Tighter policy is needed at times to ensure price stability.
Crypto market impact
The remarks arrive during a difficult period for cryptocurrencies, with expectations of further monetary tightening weighing on investor sentiment. Bitcoin fell below $70,000 on November 13, trading near $69,300 as selling pressure continued across risk assets. Ethereum slipped toward $1,950, while technology stocks faced similar weakness.
US spot Bitcoin ETFs recorded nearly $300 million in withdrawals on November 11, with BlackRock's IBIT accounting for most of the outflows. Higher interest rates generally make Treasury securities and other interest-bearing investments more attractive, potentially reducing demand for cryptocurrencies that do not provide comparable fixed income.
The pressure has become more visible since the latest US inflation report. As crypto.news previously reported, Bitcoin fell below $74,000 on November 10 after consumer prices rose 0.4% in October, exceeding economists' expectations of 0.3%. Core inflation, which excludes food and energy, rose 0.3%, compared with forecasts of 0.2%.
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