The U.S. Federal Reserve’s Rate Hike Decision and its Impact on Cryptos
The U.S. Federal Reserve is expected to announce a 25 basis point rate hike, raising the federal funds rate to its highest level in 17 years. The central bank has been concerned about inflation and has been hinting at rate hikes for weeks. Despite this, the cryptocurrency market has remained largely unaffected by macro events.
Key Points:
- The CME Rate Watch tool predicts a 98% probability of a quarter point rate increase.
- The Federal Reserve recently suspended its monetary tightening but expressed concerns about inflation.
- Crypto markets, including Bitcoin, have shown resistance to recent macroeconomic news.
- Upcoming economic indicators, such as the Consumer Confidence Index and jobless claims, will provide further insight into economic growth.
- The Personal Consumption Expenditures report, a favored inflation measure, will be released on Friday.
FOMC Party
The Federal Reserve aims to reduce inflation to its target of 2%. Inflation rates have been decreasing but the central bank remains concerned about the job market and core PCE.
Consumer Confidence Index
Last month, the CCI reached its highest level since January 2022, indicating positive sentiment about the economy. The current consensus is for the CCI to continue rising.
Jobless Claims
First-time jobless claims have been lower than expected, suggesting a strong job market. Analysts predict a slight increase in claims for the coming week.
Durable Goods
Durable goods orders have been steadily increasing, indicating a growing economy. June data is expected to show a further rise.
Personal Consumption Expenditures
PCE has been declining over the past year, which is positive for inflation. However, core PCE has remained relatively high, causing concern for the Federal Reserve. Expectations for June’s core PCE reading are slightly lower.
Hot Take: Despite the Federal Reserve’s rate hike decision, the cryptocurrency market has shown resilience to macroeconomic events. Economic indicators will provide further insight into the state of the economy, but it remains to be seen how this will impact the crypto market.
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