The US Federal Reserve Holds Steady on Monetary Policy
The US Federal Reserve’s Federal Open Market Committee (FOMC) has decided to keep its benchmark fed funds rate range unchanged at 5.25%-5.50%, as expected by market participants. This pause in rate hikes was widely anticipated, and now attention will shift to the central bank’s next policy meeting in November.
Projections for Interest Rates and Economic Growth
Fed members have projected that interest rates will remain higher next year, ranging from 4.9% to 5.6%. This is an increase compared to the previous projection of 4.3% in June. They also expect stronger economic growth, with a forecasted 2.1% real GDP increase for this year, compared to the 1% prediction in June.
Considerations for Future Monetary Policy
The Fed statement highlights that when determining the appropriate extent of additional policy firming to achieve a 2% inflation target over time, the Committee will take into account various factors including the cumulative tightening of monetary policy, the lag effect of monetary policy on economic activity and inflation, and economic and financial developments.
Impact on Bitcoin Price
The announcement had little immediate impact on the price of bitcoin (BTC), which remained flat at around $27,200 following the news.
Analysis on Rates Projection
Crypto and macro analyst Noelle Acheson noted that the most significant news is the projection for rates in 2024, which is higher than expected. This indicates that rate cuts are unlikely and suggests any future rate cuts may be delayed compared to market expectations.
Upcoming Press Conference and Policy Meeting
Fed Chair Jerome Powell will provide further details on the decision and the future outlook in a press conference scheduled for 2:30 p.m. ET. The FOMC’s next policy meeting is set for November, with a 70% chance of no rate change according to the CME’s FedWatch tool.
Hot Take: US Federal Reserve Maintains Rates and Projects Higher Rates for Next Year
The US Federal Reserve has decided to keep interest rates unchanged for now, as expected. However, they have projected higher rates for next year, signaling a more hawkish stance. This announcement has had little impact on the price of bitcoin in the immediate aftermath. The market will now turn its attention to Fed Chair Jerome Powell’s press conference and the upcoming policy meeting in November. Overall, this decision reflects the Fed’s confidence in stronger economic growth and suggests a cautious approach towards future rate cuts.
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