The Federal Reserve opted to keep its key interest rate unchanged on Wednesday, as the central bank's focus on combating inflation exacerbates the pain in the crypto market.
In his usual cautious tone, Federal Reserve Chairman Jerome Powell told reporters that the fight to raise inflation to 2% would be difficult, but said, “I don't think the next move in policy interest rates will be a rate hike.'' “It is unlikely that this will happen,” he added.
“I'd say it's unlikely,” he said, but added: “It's likely to take longer before we can be confident we're on a sustainable path to 2% inflation.” I warned you.
He did not tell reporters when he would cut interest rates.
“The committee does not believe it is appropriate to lower the target range until there is greater confidence that inflation is on a sustained path toward 2%,” Powell added in a prepared statement. Ta.
As of this writing, Bitcoin and Ethereum have fallen 4.6% and 1.3%, respectively, over the past day to $57,600 and $2,945, respectively. CoinGecko. Meanwhile, the S&P 500 and the tech-heavy Nasdaq were down slightly throughout the trading day.
However, although the daily trend is generally downward, Bitcoin and Ethereum have recorded slight gains in the past hour, both before and after the interest rate announcement. Bitcoin is up 1% in the past hour and Ethereum is up 2% in the same period.
Signs of stubborn inflation are giving traders pause. fear boiled over Last month, the Fed said it may be forced to keep interest rates high for longer than expected. These fears have recently risen due to stronger-than-expected influences. rising inflation and wage growth In the first quarter.
Changes in interest rate expectations are pushing Bitcoin prices further, as seen by Spot Bitcoin ETF intense influxJames Butterfill, head of research at CoinShares, said: Decryption Monday. For Ethereum, the pressures are: legal battle Regarding regulatory status in the United States Continue To come to light.
Inflation has been steadily declining since its multi-decade high in 2022, but remains above the Fed's annual target of 2%. When the inflation rate reached his 3.5% in the 12 months ending in March, the cryptocurrency market fell as there was no change compared to the previous month's release. tremble easily.
The Federal Reserve has kept its benchmark interest rate at a target range of 5.25% to 5.5% since July last year, pushing interest rates to the highest level in more than 23 years for several months.
Rising interest rates can slow the economy through increased borrowing costs, which is generally bad news for risky assets such as stocks and cryptocurrencies. This is because as interest rates fluctuate and remain high, cash on hand and dividends from U.S. Treasuries become relatively more attractive.
The Fed in March written in pencil A three-quarters point cut is scheduled for 2024, dampening traders' hopes. According to CME fedwatch toolfinancial market participants could end up with only one interest rate or zero interest rates by the end of the year.
Bitcoin suffered its worst month since November 2022 as hopes for an April rate cut look further away. Bitcoin has come off its all-time high in March, falling 14% for the month to around $60,000.
In April, Mr. Powell Said Inflation has not fallen as quickly as policymakers expected, suggesting that interest rate cuts may still be a long way off. Still, the Fed chair suggested that current interest rates may still do the trick.
“Recent data clearly does not give us much confidence; instead it indicates that it will likely take longer than expected to achieve that confidence,” he said. “Having said that, we believe that policy is well placed to address the risks we face.”
Edited by Andrew Hayward, with additional reporting by Mathew Di Salvo.
