Federal Reserve Holds Off on Rate Hikes, Breaking Aggressive Streak – Federal Reserve’s Decision, Bitcoin Trading Faces Minimal Volatility
After the Federal Open Market Committee (FOMC) meeting on Wednesday, the Federal Reserve made the decision not to raise its federal funds rate, thus putting an end to a series of aggressive hikes that had been in effect since March 2022.
In response to this announcement, Bitcoin displayed minimal volatility, as it maintained a rangebound trading pattern between $25,800 and $26,000.
Bitcoin Trading and Price Movement Amid Fed Announcement – Momentary Dip and Current Trading Price
Shortly after the Federal Reserve’s announcement, Bitcoin’s price experienced a momentary dip, falling from $26,000 to $25,756. Currently, it is trading at $25,868.
However, despite this price movement, it did not contribute to recovering the losses incurred last week when the U.S. Securities and Exchange Commission (SEC) filed lawsuits against major players in the crypto industry, including Binance and Coinbase, for securities law violations.
Minimal Liquidations and Fed’s Efforts to Curb Inflation : Limited Impact on Liquidations and Inflation Control
According to data from Coinglass, the announcement had a minimal effect on liquidations, totaling approximately $28 million over the past 24 hours.
In recent meetings, the Federal Reserve has consistently raised its policy rate as a measure to tackle the escalating consumer price index (CPI) inflation, which reached a peak of 9.1% in June 2022. As a result of the central bank’s endeavors, inflation has been brought down to 4% as of the previous month.
Market Expectations and Fed Governor’s Remarks
The Federal Reserve’s decision to maintain unchanged interest rates aligned with market expectations, which had shifted following Fed Governor Philip N. Jefferson’s indication several weeks ago that the central bank might opt for a steady policy rate in an upcoming meeting.
Further, Jefferson clarified that the intention behind skipping a rate hike was to gather more data, enabling the Committee to make well-informed decisions regarding future monetary policy adjustments.
However, he emphasized that this decision should not be interpreted as the Federal Reserve confirming the “peak rate” for the current cycle.
Central Bank’s Stance and Considerations for Monetary Policy
Within its announcement, the central bank provided clarification. It retains the flexibility to make adjustments to its monetary policy stance in the event that risks emerge, potentially impeding the achievement of the Committee’s goals.
This flexibility ensures that the Federal Reserve can effectively adapt to evolving economic conditions and promptly implement necessary policy revisions as deemed appropriate.
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