The interest rate decision that markets were aware of has been announced, but the important aspects are the details of this decision and Powell’s statements. Cryptocurrencies are eagerly awaiting the shaping of the Fed’s interest rate path, which is expected to be outlined in this meeting or in March. Today’s meeting is significant in terms of understanding the Fed’s response to the market’s excessive optimism.
Fed Interest Rate Decision on January 31
Fed announced the expected interest rate decision. Market predictions based on FedWatch data indicated almost a 100% probability that interest rates would be left unchanged. However, the details in the announcement and the statements to be made by Powell half an hour later are of critical importance. We have summarized the details of the Fed’s interest rate decision;
- Interest rates held steady.
- The Fed assesses that the risks to achieving employment and inflation targets are moving towards a better balance.
- The Fed does not believe it will be appropriate to lower interest rates until there is more confidence that inflation is moving sustainably towards 2%.
- The Fed notes that employment gains are moderate but strong, unemployment is low, and inflation has eased but remains high.
- The Fed indicates that recent data suggest economic activity is expanding at a strong pace.
- The Fed states that the economic outlook is uncertain, and the Committee continues to be extremely vigilant against inflation risks.