Federal Reserve Maintains Rates at 5.25-5.50% as Bitcoin Holds Steady Amid Inflation Concerns

The Federal Reserve decided to keep its main interest rates unchanged at 5.25%-5.50%, which made a big impact on financial markets. This decision shows that the central bank is still focused on fighting inflation.

It’s what most people expected, and it shows that the Fed wants to make sure prices stay steady before thinking about lowering rates.

The Fed’s monetary policy impacts crypto markets; slowing QE didn’t boost Bitcoin as expected.

They also mentioned that inflation hasn’t been improving lately and said it’s important for inflation to steadily reach its goal of 2% before they make any changes to their policies.

Bitcoin’s Response to Federal Reserve Announcement

Bitcoin saw a small increase after the Fed’s announcement, but it’s still down over 4% for the session, trading at around $58,000. This movement shows how the Fed’s decisions about money affect cryptocurrency markets.

The Fed decided to slow down how fast they reduce the amount of money they’re putting into the economy—from $60 billion to $25 billion in monthly Treasury reductions. Normally, this would make risky investments more attractive. However, the cryptocurrency market didn’t react much, which reflects worries about inflation and how strong the economy is.

A strong economy reduces rate cut expectations; chances dropped from 1% to nearly 25%.

The Fed’s decision comes at a time when the economy is doing better than expected and there’s been a small increase in inflation in early 2024. These things have changed what people think will happen with interest rates.

Before, most people thought the Fed would lower rates this year. Now, the chances of that happening have gone down a lot. Just a month ago, there was only a 1% chance that the Fed wouldn’t lower rates in 2024.

Now, it’s almost 25%. This change hasn’t just affected regular markets like the Nasdaq and S&P 500, it’s also contributed to Bitcoin’s drop from its highest point in mid-March when it was over $73,000.

Sajda Parveen
Sajda Parveen
Sajda Praveen is a market expert. She has over 6 years of experience in the field and she shares her expertise with readers. You can reach out to her at [email protected]
Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x