Breaking: US Fed Keeps Interest Rates Unchanged After Two Day Meeting

The Federal Open Market Committee (FOMC) announced on Wednesday that it would keep interest rates unchanged, being in line with market expectations. This comes on the back of the Consumer Price Index (CPI) rising 0.3% month over month in December 2023.

US Fed keeps rates unchanged

The Board of Governors of the Federal Reserve System voted unanimously to maintain the interest rate paid on reserve balances at 5.4 percent, effective February 1, 2024.

The market had priced in a near 96% chance of the Fed keeping the rates steady according to the CME FedWatch Tool.

In previous meetings, the Fed had hinted that if inflation drops to the target of 2% followed by a slowing economic expansion, it would start lowering interest rates. The current expectations stand at three rate cuts in 2024. Additionally, traders are now paying close attention to Fed Chair Jerome Powell’s speech. It will be streamed live on Fed’s official YouTube channel.

At FOMC’s last sessions in December and November of 2023, the Fed had continued to keep interest rates unchanged. This had given some respite to the troubled banking industry and sluggish stock market.

The Federal Reserve had aggressively started hiking rates back in March 2022. Since then, the FOMC had raised the benchmark interest rate eleven times. The hikes saw interest rates stand at their highest level in 22 years—a targeted range of 5.25%–5.5%.

What will crypto markets focus on?

Apart from the rate decision, markets across the globe will keep an eye on Fed Chair Jerome Powell’s press conference. Markets will now focus on how quickly the Fed will start a cycle of rate cuts. Powell’s speech is expected to provide cues to the market on monetary policy and rate-cut plans for the year.

Zakhil Suresh, a crypto asset manager and CEO of BitSave says ” he does not expect the rate cuts to happen immediately.” He adds that even when the rate cuts happen, it might take a few months before having a significant impact on high-risk speculative assets like crypto.

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