The Federal Reserve Maintains Policy Interest Rate
The Federal Reserve recently announced that there would be no change to its policy interest rate following the Federal Open Markets Committee (FOMC) meeting. This decision had little impact on Bitcoin’s price, which only decreased by 0.17% on the day.
Fed Decides to Maintain Target Range
According to the Fed’s announcement, the central bank has chosen to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The statement acknowledges that job gains have slowed but remain high, unemployment rates are still low, and inflation is above the target level.
Expected Peak for Rate Hiking Regime
The market had largely predicted this decision, indicating a potential peak for the Fed’s aggressive rate hiking regime that began last year. BlackRock’s Marilyn Watson predicts that the Fed’s target rate will likely remain unchanged until the end of the year, with modest rate cuts expected in late 2024.
Stock Market Growth Predicted
Economist Jeremy Siegel from Wharton suggests that the stock market may experience steady growth until the end of 2023, even without rate cuts. Historically, crypto prices have shown a correlation with the stock market, especially in relation to interest rate decisions.
Cautionary Outlook for 2024
Crypto market analyst TXMC warns of a potential recession in 2024 due to tight credit conditions in the economy. This could have a negative impact on both stocks and Bitcoin. The Fed also acknowledges this uncertainty, stating that tighter credit conditions could affect economic activity, hiring, and inflation.
Hot Take: What Does It Mean for Crypto?
The Federal Reserve’s decision to maintain its policy interest rate has not caused significant fluctuations in Bitcoin’s price. However, the correlation between crypto prices and the stock market suggests that future rate decisions could impact the cryptocurrency market. The cautionary outlook for 2024 raises concerns about a potential recession and its effects on both stocks and Bitcoin. It remains uncertain how these factors will play out in the coming years, but they are worth monitoring for crypto investors.
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