Bitcoin
Bitcoin (BTC) Price Gives Back Some Gains on Fed’s Hawkish Outlook
As expected, the U.S. Federal Reserve’s Federal Open Market Committee on Wednesday maintained its federal funds benchmark rate range between 5.25% and 5.50%, but its economic outlook now calls for just one cut. of 25 basis points in rates this year.
“In recent months, there has been modest progress toward the Committee’s 2 percent inflation target,” the FOMC said in its report. policy statement. The “modest” wording is notable because the previous policy statement complained of a “lack of progress” towards lower inflation.
Updating your economic projections, the Fed’s median expectation for the year-end 2024 federal funds rate is now 5.1%, up from 4.6% three months ago. This means the central bank is now only anticipating a 25 basis point rate cut this year, down from 75 basis points previously. The federal funds expectation for year-end 2025 is now 4.1%, suggesting 100 basis points in rate cuts next year.
Earlier today, the US Consumer Price Index report for May showed an unexpected slowdown in last month’s inflation. The news sent cryptocurrency, stock and bond markets rising sharply as traders raised their expectations for the Fed’s rate cuts to begin. The aggressive shift in the 2024 rate outlook took some of the wind out of bitcoin (BTC) rally, taking the price to US$69,100, still up 3.5% in the last 24 hours.
US stocks remain sharply higher, with the Nasdaq ahead 1.7% and the S&P 500 1%. The dollar index remains under pressure, but came off session lows and fell 0.5%. The 10-year Treasury yield rose but remains lower by 12.5 basis points on the day at 4.28%.
Still to come is Fed Chairman Jerome Powell’s post-meeting press conference, which will begin at 2:30 p.m. ET, in which he will provide more details on the central bank’s thinking regarding today’s decision and the monetary policy going forward.