- Federal Reserve chair has said rate cuts may not be appropriate this year.
- According to Jerome Powell, it could be two years before the next interest rate reduction.
- The assertion came after the agency left interest rates unchanged at the 5-5.25% range.
- Crypto markets have fallen, with Bitcoin price dropping to around $25,000.
Federal Reserve chair Jerome Powell has said 2023 may not be the year the agency reduced the interest rate, speculating a two-year wait before such an outcome. The assertion came during the Federal Open Market Committee (FOMC) meeting on June 14 at 2:00 pm EST.
Also Read: Federal Reserve meeting news conference: Powell speaks on policy outlook
Federal Reserve keen to maintain price stability
Federal Reserve chair Jerome Powell has put out any hopes the market may have for a rate cut in 2023, saying it may not be the ideal time for such an action. According to the agency, the 5% will stick until a notable change occurs. This articulation clarifies hopes that go back to March 2023, when market participants anticipated at least four rate cuts before the end of the year.
FOMC Outlook
— Emy (@CryptoEmy_) June 14, 2023
We know JPow is gonna pause today, no pivot though.
Bigger picture, market is still pricing in one more hike and may even see 2 hikes this year on the dot plot.
FFR +5% is going to be the annoying range until March 2024.
No rate cuts this year. $BTC $ETH $SPX
The move is part of the Fed's commitment to maintain price stability, which it believes is crucial for the economy to work. Notably, this is one of the agency's key mandates aside from pushing toward full employment.
Read Chair Powell's full opening statement from the #FOMC press conference (PDF): https://t.co/KQdViMip53 pic.twitter.com/Ihdh8tlUxr
— Federal Reserve (@federalreserve) June 14, 2023
It is worth noting that the current pause comes after a series of ten consecutive interest rate hikes. To the naked eye, the move is meant to give the economy a resting phase from the prevailing pressure. However, experts say this decision is a calculated move to give the central bank a chance to evaluate the impact of the aggressive tightening efforts that have been employed recently.
While the sudden turn of events is a clear pardon for the traditional finance (TradFi) market, there is currently no expectation that this will rule out increases later this year.
As reported, "The Summary of Economic Projections showed that the terminal rate projection for end-2023 was revised to 5.6% from 5.1% in March. Similarly, the end-2024 rate forecast rose to 4.6% from 4.3%. In summary, Fed projections imply two more 25 basis points (bps) rate hikes this year and 100 bps rate cuts in 2024."
Crypto market reaction to FOMC
TradFi's immediate reaction was bullish, as indicated by the US Dollar (USD), which gathered strength to suggest a hawkish takeaway. However, the crypto market slumped further, recording significant price shifts to continue the downtrend. Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are down a steady 3.5%, 5.0%, and 10.3%, worse than pre-release rates. For BTC, the critical support zone lies between $18,982 and $24,885, as shown by IntoTheBlock's GIOM metric.
Any efforts to push Bitcoin price below this zone would be countered by buying pressure from approximately 5.89 million addresses that bought around 2.29 million BTC at an average price of $21,640.
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