Fed Chairman Powell has just started his second announcement of the year after about two months. Before his speech, the second Fed decision for 2024 was also announced. The 2024 interest decision, closely followed by Bitcoin and altcoin investors, did not come as a surprise, and the Fed rate was kept steady in the range of 5.25-5.50. With core data such as inflation coming in high, all eyes are on Powell. Here are the key points from Powell’s speech.
Powell Makes a Statement
As of the time of writing, Fed Chairman Jerome Powell is making statements that could shape the remainder of 2024, following an announcement made exactly 30 minutes ago. The statements could serve as a guide for investors closely monitoring the market ahead of the next FOMC meeting in 2024.
The speech that started at 21:30 is expected to have a significant impact on the market, which is crucial for investors. It is a known fact that Powell’s speeches have major effects on price movements. Throughout the speech, we will share with you the important headlines from Powell’s announcements.
According to the announcement made at 21:00, the decision was made to keep interest rates steady. On the other hand, FedWatch’s expectation of an interest rate cut in March 2024 has thus been invalidated.
Powell’s second announcement of the year is expected to touch on some points regarding the increasingly challenging interest rate cuts throughout the second quarter of the year. Meanwhile, Fed officials reiterated their end-of-2024 interest rate expectation at 4.6%.
Here are the important headlines from Powell’s announcements:
- 21.31 Powell started speaking.
- The economy has made significant progress, inflation has decreased considerably. GDP has been supported by strong consumer demand and improving supply chains.
- Risks to the Fed’s goals are becoming more balanced. High interest rates have negatively affected businesses’ fixed-income investments.
- Supply and demand are reaching a better balance. Labor demand still exceeds supply, and GDP estimates have been revised higher due to labor supply data.
- FOMC participants expect the labor market to continue rebalancing. Nominal wage growth is easing.
- Inflation expectations are well anchored. Our policy interest rate is likely at its peak.
- At some point this year, it is likely we will cut interest rates, but the outlook is uncertain and we remain cautious against risks.
- If necessary, we are prepared to keep interest rates higher for a longer period.
- We need more confidence that inflation is moving sustainably downward before we reduce interest rates.
- Unexpected weakness in the labor market may also require a response (cut).
- Regarding the balance sheet, we discussed issues related to the slowdown in asset reduction, and our general sentiment is that we will start to stop quite soon.
- Slowing down the process (asset reduction) will ensure a smooth transition.
- Inflation data came in a bit higher than expected.
- I assume we will continue to see commodity prices moving towards a new balance. Risks are really two-sided at the moment.
- The first interest rate cut is very important. January CPI and PCE figures were quite high but may have been due to seasonal adjustments.
- February was also high, but not terrible. January and February inflation figures did not increase our confidence.
The Fed and Cryptocurrencies
The FOMC decisions, eagerly awaited by all investors, were of great significance not only to the global economy but also to cryptocurrencies. The impact of the FOMC decision once again became evident.
Interest rate hikes, which started in March 2022 and were exacerbated by subsequent fiascos, nearly pulled the plug on cryptocurrencies. Following a series of interest rate decisions, the rates took on a steady appearance by mid-2023, showing signs of improvement in the US economy and paving the way for renewed focus on BTC.
Towards the end of 2023, the cryptocurrency market saw a period of peak activity. During this period, Bitcoin, along with many altcoins, revived and triggered a rise in the market. After the SEC approved the spot Bitcoin ETF, Bitcoin surged above $49,000, then fell to $38,500, but later started a new rise that would take it to ATHs in the middle of March.
In the future, lowering interest rates could have a negative effect on the dollar and positively impact assets like gold, silver, and Bitcoin. Bitcoin recovered from its drop to the $60,800 level, rising again to the $64,600 level before pulling back slightly and is currently trading at the $64,300 level.
