The Federal Reserve meeting, eagerly awaited by cryptocurrency enthusiasts, has concluded. Following disappointing inflation data, the Fed has announced its decision on interest rates. The most significant factor that increased the importance of the meeting was the announcement of the members’ long-term interest rate expectations.
Until January, there are no other developments on the macroeconomic front that could negatively affect the cryptocurrency market. The rise in cryptocurrencies could begin with the expectation of the approval of a spot Bitcoin ETF on January 10th. However, the point of interest here will be the messages given by Fed Chairman Powell in about half an hour. If Powell adopts an overly hawkish stance and weakens the expectation for a 100-basis-point cut for the next year, a short-term decline won’t be a surprise.
The Federal Reserve’s decision on interest rates and long-term targets are as follows: it has maintained interest rates, decided to continue reducing bond purchases, and kept the unemployment rate forecast for 2024 at 4.1%. Interest rates are projected to be 3.6% for 2025 and 2.9% for 2026. The decision was unanimous.
The Fed noted that economic growth has slowed compared to the strong level in the third quarter and that inflation has decreased compared to last year, but it is still high. The FOMC foresees a 75-basis-point rate cut for 2024 and will assess the need for additional tightening.
Federal Reserve officials’ median view for the federal funds rate at the end of 2024 is 4.6%, indicating a level below the current policy rate of 5.4%. Fed officials predict weaker GDP growth for 2024 and the same unemployment rate as the September estimates, expecting inflation to be at 2.4% in 2024 and to return to the 2% target by 2026.