Federal Reserve Chairman Jerome Powell has disclosed publicly that there wouldn’t be any change to the current 5.25% to 5.50% interest rate.
This has come as a shocker to many because the usual expectation from a central bank is to provide a rate cut to spur growth.
However, Powell is more careful, stating that inflation is still elevated and has to be lowered back to 2%.
The economy is showing some signs of improvement with regard to the inflation rate, which has slightly decreased recently. Thus, the Fed is expecting to see improvements that are more consistent before it makes some reactions.
These considerations explain the wording of The Federal Reserve’s statement in which it stated that “the Committee is prepared to adjust policy as needed to achieve the inflation target”
Here are the latest key indicators:
- The U.S. Consumer Price Index (CPI) showed no change in May, beating expectations and indicating a possible slowdown in inflation.
- The core CPI, which excludes volatile food and energy prices, increased by 0.2% in May, better than the expected 0.3% rise and consistent with the previous month’s 0.3%.
- On an annual basis, the CPI rose by 3.3%, slightly below both the previous month’s 3.4% and analysts’ forecasts.
This news has been met well by the cryptocurrency market, with Bitcoin’s price rising to about $69,400, which is a 3.7% uptick in the past 24 hours. Taken together, traders believe that the next phase in the cryptocurrency rally will result from more relaxed monetary policies among traders.
“The fact that the Federal Reserve left interest rates as they are suggests that they are not rushing things and are inclined to wait and see how the economy pans out,” says Tobi Amure, a tech analyst at Trading. Biz.
This conservative approach is beneficial for the crypto market because the Fed is ready to wait and let the economy grow before making more decisions. We might enjoy the continuous uptrend with BTC and other altcoins as the traders gain confidence in the market.”
The Federal Reserve’s decision to maintain rates shows a defensive monetary policy. The monetary authority continues to observe new data in its effort to ensure that inflation is back to the target and in a sustainable manner. As the crypto market continues to react to this news, one thing is clear: decisions made by the Fed will attract the attention of traders as well as investors in the financial market.
