Crypto enthusiasts’ eager wait has finally come to an end, and there hasn’t been a meeting that has been this highly anticipated for a long time. Following the disheartening inflation data that came on Friday, the Fed announced its interest rate decision. The most important factor that made this meeting significant was the announcement of the members’ long-term interest rate expectations.
The crypto market now faces no other developments that could trigger significant negativity on the macro front until January. With the support of expectations for the approval of a spot Bitcoin ETF on January 10th, a rise in cryptocurrencies could begin. However, the point of attention here will be the messages to be given by Fed Chairman Powell in about half an hour. If Powell adopts an overly hawkish stance and undermines the expectation of 100bp+ cuts for the coming year, a short-term decline would not be surprising.
The details of the Fed’s interest rate decision and long-term targets are as follows;
– The Fed left interest rates unchanged.
– The Fed will continue tapering bond purchases as previously planned.
– The FOMC’s median unemployment forecast for 2024 remains unchanged at 4.1%.
– The FOMC’s median forecast indicates that interest rates will be 3.6% in 2025 and 2.9% in 2026.
– The Fed unanimously decided.
– The Fed: Economic growth has slowed compared to its strong pace in the third quarter.
– The Fed: Inflation has decreased over the past year but continues to be high.
– The FOMC’s median forecast for 2024 indicates a 75 basis point rate cut to 4.6%.
– The Fed will assess the extent of the additional tightening needed.
– The FOMC’s median 2024 PCE and core PCE forecasts have retreated to 2.4%.
– Federal Reserve Officials’ median view for the end of 2026 federal funds rate is 2.9% (previous 2.9%).
– Federal Reserve Officials’ median view for the end of 2025 federal funds rate is 3.6% (previous 3.9%).
– Federal Reserve Officials’ median view for the end of 2024 federal funds rate is 4.6%, compared to the current policy rate of 5.4%.
– Ahead of the Fed decision, Fed swaps were discounted by 130bp for 2024 compared to 115bp.
– No policy maker expects the policy rate at the end of 2024 to be above the current level.
– According to Fed projections, 8 of 19 officials see the policy rate above the 2024 median, while 5 see it below.
– Federal Reserve policymakers forecast weaker GDP growth and the same unemployment rate for 2024 compared to the September estimates.
– Federal Reserve officials expect inflation to be at 2.4% in 2024 and to return to the 2% target by 2026.
