Fed Chair Powell has begun his first statements of the year, and the initial Fed decision for 2024 was also announced just before his speech. There were no surprises in the 2024 interest rate decision closely monitored by Bitcoin and altcoin investors, as the Fed kept the rate steady between 5.25-5.50%. Consequently, the policy interest rate in the United States continues to remain at its highest level in 22 years since July. Here are the key points from Powell’s speech.
Powell Makes a Statement
As of this writing, Fed Chair Jerome Powell is making statements that could significantly affect the global economy in 2024 and beyond, following an announcement made half an hour ago. These statements could be important in guiding market participants before the next FOMC meeting in 2024.
It will be beneficial for investors to closely follow the effects of the speech that started at 22:30 on the market. Investors should always act cautiously regarding possible price movements and take necessary precautions. We will be sharing the important headlines from Powell’s speech in this news article.
According to the announcement made at 22:00, the decision was to keep interest rates steady. In addition, FedWatch’s expectation for a rate cut in March 2024 continues. Powell’s first statement of the year is expected to shed light on what might happen for the remainder of 2024, especially since rate cuts are anticipated starting in March.
Here are the important headlines from Powell’s statements:
- 22:30 Powell started speaking.
- The economy has made good progress, inflation has decreased. The policy interest rate is moving towards the restrictive zone.
- Housing sector activities have slowed down. The labor market remains tight. Labor demand still exceeds supply.
- Long-term inflation expectations appear solid. Our policy interest rate is likely at its peak.
- It will probably be appropriate to start lowering interest rates within this year.
- If the economy develops as expected, we will pull back the policy interest rate this year. If necessary, I am ready to maintain the current policy interest rate for a longer period.
- Reducing policy restrictions too early or too much could reverse progress on inflation. Conversely, lowering the policy interest rate too late could unnecessarily weaken the economy.
- We are confident, but more is needed. We have six months of good inflation data. We need to be sure that what we see is a real signal regarding inflation data.
- We do not think we necessarily need to see weaker growth to reduce inflation. It seems likely that we will establish confidence regarding inflation.
- Nearly everyone on the committee believes that it will be appropriate to lower interest rates.
- We are truly in a risk management mode. The timing of the reductions is related to our confidence.
Fed and Cryptocurrencies
FOMC decisions, which all investors hold their breath for and follow closely, not only affect the world economy but also have a significant impact on cryptocurrencies, as has been clearly seen in the past.
Interest rate hikes that began in March 2022 had effectively pulled the plug on cryptocurrencies at that time. Following a period of steady interest rate decisions in mid-2023, the announcements did not seem to have a significant impact on cryptocurrencies.
The effects of the Fed’s planned interest rate cuts this year on the dollar and cryptocurrencies are already a matter of curiosity.
After a disastrous 2022, the stabilization of interest rates in mid-2023 and increasing expectations for a decrease in mid-2024 had a positive effect on cryptocurrencies.
In the final months of 2023, the cryptocurrency market saw heightened activity, leading to a revival of Bitcoin and many altcoins. Following the SEC’s approval of a spot Bitcoin ETF, Bitcoin surged above $49,000 but later experienced a sharp decline.
Interest rate cuts in the upcoming period could negatively affect the Dollar and potentially have a positive impact on Bitcoin. As of this writing, Bitcoin has risen above $43,000 again and is trying to consolidate its position at $43,300. At the moment of the announcements, the price was hovering around $43,100.
