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Bitcoin (BTC) and altcoins await with bated breath as the US Federal Reserve’s (Fed) pivotal interest rate decision is to be unveiled today. Fed officials are projected to effectuate one final policy rate increase this week, decelerating the most vigorous rate hike cycle in four decades.
Fed Anticipated to Elevate Interest Rate by 25 Basis Points
Subsequent to the two-day FOMC assembly, the Fed is scheduled to disclose its interest rate verdict today at 21:00 TSI. The central bank is predicted to augment the policy rate by 25 basis points, situating it within a range of 5 to 5.25 percent and elevating the policy rate to its loftiest point in 16 years.
Per CME’s FedWatch instrument, the Fed is poised to escalate the policy rate by 25 basis points with an 87.4 percent probability, while a 12.6 percent probability suggests maintenance at the current level.
Market connoisseurs and analysts foresee that indications of tempering economic data and constricting credit will facilitate Fed officials in reaching a consensus that interest rates are adequately restrictive. However, they advise vigilance, as Fed officials under Jerome Powell may desire to preserve their options given the sustained elevation of inflation.
Anna Wong, Chief Economist at Bloomberg Economics, anticipates that inflation will persist as a paramount concern despite the ongoing banking crisis and projects a 25 basis point rate hike, situating the policy rate between 5 and 5.25 percent. Wong posits that Powell will deliver a hawkish address at the press conference commencing at 21:30, asserting that inflation remains high and that they will not waver in elevating interest rates further if necessary.
Having initiated interest rate increases in March 2022, the Fed last elevated the policy rate by 25 basis points to a range of 4.75 to 5 percent during the March 22 meeting. Projections released post-decision revealed that the majority of Fed officials advocated for one final hike without disrupting the rate increase trajectory. Certain officials also expressed a preference to await the economic impact of implemented measures prior to implementing further increases.
Inflation Persists at Elevated Levels
Inflation obstinately remains high, exacerbating the banking crisis, which has culminated in the collapse of multiple regional banks. The Fed’s favored inflation metric has consistently exceeded predictions since the previous meeting, accompanied by ascending inflation expectations.
Ahead of the critical Fed interest rate pronouncement, the preeminent cryptocurrency Bitcoin is trading at $28,611, experiencing a 2.01 percent increase within the last 24 hours, while the leading altcoin Ethereum (ETH) is transacted at $865, witnessing a 1.82 percent upswing within the same timeframe. Analysts caution that the cryptocurrency market will exhibit heightened volatility preceding and following the interest rate decision, underscoring that Powell’s statements will shape market outcomes.
