The interest rate was left unchanged at 4.5% and there was no change in the balance sheet policy guidance, both as globally expected. The combination of minor adjustments in the statement and a strong indication at the press conference that the FOMC will be patient made it clear that the March meeting is unlikely to offer further easing. Markets are almost estimating our 2025 discount.
The statement changes were moderately more hawkish
The committee mostly changed the date on the statement and reissued December but with two modest changes to the opening paragraph which certainly doesn’t make it seem like they’re in a hurry to cut back anytime soon.
Regarding inflation, they now say “inflation remains fairly high” instead of previously saying “inflation has made progress towards the committee’s target of 2% but is still fairly high.” Powell downplayed this change in his press conference by saying, “We just chose to shorten this sentence.
Regarding jobs, they now say “the unemployment rate has stabilized at a low level in recent months, and labor market conditions have remained strong” versus previously saying “since earlier in the year, overall labor market conditions have improved, and the unemployment rate has risen but remains low.”
The decision was unanimous. Powell stresses patience There were two key remarks at the press conference that effectively ruled out a March cut or at least an exceptionally high level situation to do so.
When asked “Is the March cut still on the table? Are you looking to see better inflation data to lower or just align with expectations?” Powell said: “We believe that the economic downturn continues on a broad and bumpy path, and that means we do not need to rush to adjust our policy position.
US Federal Reserve holds interest rates amid inflation
The US Federal Reserve decided to keep interest rates unchanged at 4.25-4.50%. Federal Reserve Chairman Jerome Powell emphasized a cautious approach amid strong labor market conditions and high inflation. Experts expect a long period of fixed rates as the Fed assesses economic data.
After the two-day meeting of the Federal Open Market Committee (FOMC), the US Federal Reserve announced on January 29 that interest rates will remain unchanged at 4.25-4.50 percent at this point. The Interest Rate Setting Committee led by US Federal Reserve Chairman Jerome Powell last cut interest rates for three consecutive meetings starting in September 2024 for the first time in four years.
As Mint reported earlier, Powell said at the post-policy press conference that the central bank does not need to rush to adjust the policy stance. He stressed that the interest rate pause aims to see more progress on inflation. The Federal Open Market Committee stated that labor market conditions remain strong, and that inflation remains “fairly high.”
The US Federal Reserve’s decision to pause interest rate hikes could cause a shift in the global economy, with inflation likely to remain high.
With US President Donald Trump calling for “Made in America”. The costs of US companies will rise due to higher interest rates, affecting global trade. Experts believe that this may create short-term uncertainty for investors. However, the long-term outlook remains positive as the US economy is expected to grow at a faster pace.
Experts noted that the US Federal Reserve’s decision to maintain the status quo was widely expected and not surprising.
The Fed followed expected lines and kept interest rates unchanged. “There hasn’t been any element of big surprise except for the fact that the Fed is guessing President Trump’s next move.”
Bitcoin price rises after the Federal Reserve Bank announcement
The price of Bitcoin exceeded $105K after the Federal Open Market Committee decided to keep interest rates steady. Could this be a catalyst to push the price of Bitcoin to an all-time high?
The FOMC’s decision to keep federal interest rates between 4.25% and 4.5% acts as a catalyst for the cryptocurrency market. The total market capitalization of cryptocurrencies increased by 2.87% in the past 24 hours, reaching $3.5 trillion.
Amid recovering sentiment, Bitcoin surpassed the $105,000 mark, seeing a 3.15% rise over the past 24 hours. As conditions improve, bulls expect a similar rise to the 2021 market.
Institutions are back for more Bitcoin
Institutional support for Bitcoin resurfaced with the FOMC’s decision to keep interest rates steady. On January 29, the total daily net flow to 12 exchange-traded funds in the United States was $92.09 million.
Notably, this represents a significant recovery compared to the $457 million outflow on January 27.
On January 29, Grayscale purchased $106.23 million worth of Bitcoin. In addition, Fidelity acquired $18.20 million from Bitcoin.
In short, the recovery of institutional support, with a net inflow of $92.09 million into Bitcoin exchange-traded funds on January 29. Signals renewed investor confidence.
With the significant recovery of the market and the growing expectations of a bull market similar to 2021, traders’ speculation is rising. Bitcoin’s open share rose 4.43%, to $66.18 billion.
In addition, the buying and selling ratio has now shifted to 1.0092. A significant improvement compared to 0.96 the previous day. Moreover, funding rates remain steady at 0.0086%. These key derivatives indicators indicate sustainable traders’ confidence, supporting Bitcoin’s bullish potential.
