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- Efficiencies provided by artificial intelligence could reduce inflationary pressures, according to Coinbase analysts.
- Combined with mounting pressure from U.S. politicians, these factors could support more aggressive Fed rate cuts this year, the analysts added.
"We believe that the disinflationary impacts of artificial intelligence and technology driven efficiency gains will continue to push this trend of moderating inflation throughout this year," the analysts said in a Friday report.
Friday's Coinbase market report added that these AI-driven efficiencies, coupled with mounting political pressure for monetary easing in the U.S., could support earlier and more aggressive rate cuts than those signaled by the Federal Reserve thus far.
"When rate cuts begin, we think that will be a constructive catalyst for both equities and crypto as it could lead to capital outflows from money market funds, currently holding $6.4 trillion, into other asset classes," the analysts added.
After Wednesday's Federal Open Market Committee (FOMC) meeting, interest rate traders are betting the Fed could deliver a cut as early as September this year. Coinbase analysts added to this forecast, stating that "there could be another rate cut again in November because of our view that the disinflationary trend remains intact, despite our concerns over the cost of shelter."