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Bitcoin, Ethereum and Solana experienced noticeable increases following the latest statement by Federal Reserve Chairman Jerome Powell. The much-anticipated decision was announced recently, and interest rates were kept steady once again.
Jerome Powell Speaks, Crypto Markets Rise
Federal Reserve appears to have once again left existing inflation concerns unaddressed. The institution has applied a wait-and-see approach again, responding to market expectations by keeping the current benchmark interest rate unchanged.
In his statement, Powell highlighted the ongoing challenges in bringing inflation down to the Fed’s 2% target, indicating that the central bank’s next move would not be a rate hike.
Instead, the committee will continue to implement a cautious monetary strategy plan, ready to act in coordination when necessary to ensure economic stability.
Powell made the following statement:
This year so far, the data have not given us more confidence, especially as inflation readings came in above expectations, as I mentioned before. It is likely that gaining such confidence will take longer than previously expected.
While these statements were ongoing, eyes were also on the market. The cryptocurrency market responded positively to the announcements, and investors adopted a positive attitude towards the decision to maintain stable interest rates.
Initially, Bitcoin rose 5% to $59,440 following the decision but later fell back to $57,100.
Its closest competitor, Ethereum, saw a 5.02% increase to $3,015 but then dropped to $2,929.
Among the most talked-about in the market recently, Solana experienced an 11% increase to $136 but is currently trading at $130.
The stability seen in interest rates can generally be interpreted as an increase in confidence in the market. However, the recent decline has prompted questions about the challenges that cryptocurrencies, classified as risky assets, may face.
Fed Announces New Decisions
Additionally, the Fed announced that there will be a slowdown in the pace of balance sheet reduction starting in June. This adjustment seems to be made to prevent a market volatility similar to that seen in September 2019.
As of June 1, the Fed will reduce the monthly flow of Treasury securities from $60 billion to $25 billion. Despite this, it will allow $35 billion per month in mortgage-backed securities to be consumed and will transfer the excess to Treasury bonds.
This decision is said to be aimed at organizing the central bank’s balance sheet operations.
