- The Federal Reserve has firmly decided to keep the funds rate within its current range of 5.25%-5.5%.
- This decision places the interest rate at its highest level since the early 2000s.
- The global crypto market remains down, showing modest gains.
The U.S. Federal Reserve’s Federal Open Market Committee (FOMC) is set to announce its stance on interest rates this Wednesday. Analysts widely predict that the FOMC will maintain the target range for the federal funds rate at a historic 5.25%–5.5%, marking a 22-year high.
Fed Chair Jerome Powell also recently signaled that the committee will carefully assess the consequences of recent rate hikes as they approach the conclusion of their rate-tightening campaign. While inflation levels in the United States continue to exceed the Federal Reserve’s 2% target, the FOMC is poised to announce a “pause” in rate increases for the second time this year. Nevertheless, it’s important to note that the Fed retains the option to raise interest rates by an additional 25 basis points by year-end should inflationary pressures persist.
The annual Personal Consumption Expenditures (PCE) inflation rate, regarded as the Fed’s preferred gauge of inflation, crept up to 3.3% in July from 3% in June. This represents a significant uptick from the 9.1% rate recorded a year ago, underlining the ongoing inflationary challenges faced by the central bank.
Bitcoin (BTC) Response
According to the CME FedWatch Tool, there is an overwhelming 99% probability that the FOMC will opt for a pause in rate adjustments at the upcoming meeting today. Concurrently, the U.S. dollar index (DXY) remains hovering above the 105 mark.
Bitcoin (BTC) Price Chart Source: CoinMarketCap)
In the cryptocurrency realm, Bitcoin’s (BTC) attempt at staging a substantial rally faced resistance on Tuesday. At the time of writing, BTC managed to maintain its position above the $27,000 mark and was trading at $27,122, reflecting a 1.3% increase over the past 24 hours. A;so, the price of Bitcoin soared over 3.7% in a week. Still, the Fed rate has the potential to exert downward pressure on the crypto market.
