Collins says rate hikes may be needed as crypto markets weaken

At the Boston Fed’s 70th Economic Conference, Collins said higher rates can make homes more expensive to buy and build in the near term. Rising property prices since the pandemic and higher mortgage rates since early 2022 have put homeownership beyond the reach of many Americans, she said. Employers in New England have also struggled to recruit workers when suitable housing is unavailable or too costly; Collins cited physicians, mechanics, scientists and hospitality workers who withdrew from job opportunities for that reason.

Housing construction has also been slowed by shortages of skilled workers. Collins said construction investment and mortgage demand are especially sensitive to interest rates, so tighter monetary policy can curb new supply and borrowing. But she argued that price stability creates more predictable conditions over time and benefits housing and the wider economy.

Bitcoin slipped below $70,000 on November 13, while Ethereum fell toward $1,950 and technology stocks also weakened. Higher rates can make Treasury securities and other interest-bearing assets more attractive than cryptocurrencies, which do not offer comparable fixed income.

Inflation data has added to rate concerns. October consumer prices rose 0.4%, above economists’ 0.3% forecast, while core inflation increased 0.3%, compared with expectations of 0.2%. On November 10, Polymarket traders put the chance of a quarter-point Fed increase at 85%, and the chance of a larger move at 12.7%. Deutsche Bank forecast three consecutive quarter-point hikes in December, January and March, taking the federal funds target range to 4.50%–4.75%.

US spot Bitcoin ETFs recorded $299.9 million in net withdrawals on November 11, including $269.73 million from BlackRock’s IBIT. Outflows totaled roughly $1.44 billion over five consecutive trading sessions. Ethereum ETFs lost a further $144.81 million that day. The Fed’s next rate decision is scheduled for December 9; minutes from its October meeting are due November 18, followed by the October personal consumption expenditures inflation report on November 25.