In a move that sent bullish waves through the US financial world, the Federal Reserve recently announced its decision to keep interest rates at their current level, between 5% and 5.25%. The move, which comes amid a tumultuous economic climate, was greeted with a sigh of relief by many, especially those in the cryptocurrency market.
Fed hints at tightening measures to curb inflation
On Wednesday, after 15 months of steady interest rate hikes, Federal Reserve officials decided to take a break. However, they indicated they would likely continue with tightening measures to curb inflation, forecasting larger increases than economists and investors had anticipated.
The Federal Open Market Committee, in a statement released in Washington on Wednesday, said, “By keeping the target range unchanged at this meeting, the committee can assess further information and its impact on monetary policy.”
The US Federal Reserve has decided to maintain its benchmark federal funds rate range between 5.0 and 5.25%. This decision was made in recognition of the importance of allowing sufficient time to assess the effects of past monetary tightening measures on the economy.
In an effort to curb inflation, which previously exceeded 8% on an annual basis, the Federal Reserve launched a series of monetary tightening measures from March 2022. In 10 consecutive meetings, it gradually raised rates rate, raising the federal funds rate by 0-0.25% to its current range of 5.0-5.25%.
Inflation has shown a gradual deceleration over the past year, as evidenced by the Consumer Price Index (CPI) report released on Tuesday, which showed a drop to 4% in May, the highest level low observed in two years. While this rate remains above the central bank’s 2% inflation target, the Fed has pointed out that monetary policy often operates with a considerable time lag. Therefore, as the recent rate hikes trickle down to the economic system, inflation is expected to continue to decline.
Bitcoin price shows extreme volatility at $26,000
Bitcoin’s bear market, characterized by a significant decline in its price from an all-time high of around $69,000 in late 2021 to around $26,000 currently, can be attributed, in part, to the aggressive series of price increases. Federal Reserve interest rate.
However, the prospect of the central bank potentially easing its monetary tightening measures presents one of the optimistic scenarios for Bitcoin in 2023 and beyond.
Following the news, Bitcoin price is showing extreme volatility below the $26,000 mark and it is currently hovering around $25,843.
The Federal Reserve’s decision to keep interest rates unchanged is a positive development for the crypto market. This creates an environment conducive to investing in cryptocurrencies and signals a level of economic stability that can help mitigate the perceived risks associated with these digital assets.