In a widely anticipated move, the U.S. Federal Reserve announced on Wednesday that it would keep its benchmark interest rates unchanged. This decision comes after the Federal Open Market Committee (FOMC) unanimously voted to maintain the federal funds rate at a 22-year high of 5.25% to 5.5%.
The two-day meeting, held on September 19 and 20, saw the Committee reiterate its commitment to achieving maximum employment and an inflation rate of 2% over the long term.
The FOMC’s decision was in line with market expectations, with data from CME Group’s FedWatch Tool indicating a 99% probability of a rate hike pause. The Committee’s press release stated, “In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent.”
Despite the pause in rate hikes, the Federal Reserve’s language remained cautious about the future of inflation. The release emphasized the Committee’s commitment to monitoring incoming information for its implications on the economic outlook. It further noted that the Committee is prepared to adjust its monetary policy stance if risks emerge that could impede the attainment of its goals.
In the cryptocurrency market, Bitcoin BTC 0.12% showed resilience in the face of the Fed’s decision. The leading digital currency experienced snap volatility but managed to maintain its support level at $27,000. Market analysts observed Bitcoin’s price action as it responded to the rate decision and comments from Fed Chair Jerome Powell.
Powell, in his subsequent remarks, hinted at the possibility of another rate hike in 2023. He emphasized that the journey to bring inflation down to the Fed’s 2% target still had “a long way to go.”
Powell provided projections indicating that “if the economy evolves as expected, the median participants project that the appropriate level of the federal funds rate will be 5.6% at the end of this year, 5.1% at the end of 2024, and 3.9% at the end of 2025.” Notably, the medium projection for the end of this year remained unchanged, but projections for the next two years saw an upward adjustment of 0.5%.
Bitcoin’s price, following these announcements, continued to hover above the $27,000 mark, with no significant deviations from its recent intraday trading range. Some market experts, such as MichaĆ«l van de Poppe, founder and CEO of trading firm Eight, suggested that the Fed might be done with its rate-hiking policy, which could be beneficial for Bitcoin in the long run.
