TL;DR:
- The Federal Open Market Committee maintained the federal funds rate target range between 3.5% and 3.75%.
- The year-end median interest rate projection rose to 3.8%, eliminating the expectation of rate cuts.
- The price of the benchmark cryptocurrency dropped to the $65,300 zone following the official announcement.
This Wednesday, it was announced that the benchmark interest rates of the United States Federal Reserve will remain steady. The U.S. central bank ratified the target range for the federal funds rate at an interval of 3.5% to 3.75%, prolonging a wait-and-see posture for the fourth time this year. In this context, Bitcoin reacted to the downside following the publication of the official statement, reversing the stability it showed prior to the decision.
Immediately after the announcement, the pioneer crypto was trading around $65,000. Market data indicates that the asset experienced a retreat of just over 1% on the day, although the weekly breakdown reflected that the asset maintained a positive performance of 5% over the last seven days.
Other assets in the crypto market showed a more solid performance in the weekly balance prior to the decision, with increases of 7.6% for Ethereum, placing it at 1,763 dollars, and 13% for Solana, which reached 73 dollars.
Price stability under the leadership of Kevin Warsh
In its official statement, the Federal Open Market Committee (FOMC) specified that economic activity continues to expand at a solid pace. However, authorities pointed out that the current uncertainty is due, in part, to tensions in the Middle East and shocks in the energy supply.
In the official document, FOMC members textually stated: “The Committee will deliver price stability.”
Market expectations regarding interest rates shifted following the publication of the entity’s quarterly economic projections. According to the institution’s report, the year-end median rate forecast rose to 3.8% from the 3.4% estimated in March, signaling that the central bank is no longer planning to implement cuts in the coming months.
This meeting marked the debut of Kevin Warsh as chair of the Federal Reserve. Records of the process indicate that Warsh’s nomination faced resistance in Congress until the Department of Justice concluded a criminal investigation into the outgoing chair, Jerome Powell.
During the post-meeting press conference, Warsh stated that the committee’s focus is unanimous. Additionally, the official announced the creation of five technical task forces tasked with evaluating institutional communication, the balance sheet, data sources, technological productivity, and the conceptual framework for inflation.
The decision to hold the rate steady was unanimous within the committee, and Powell himself voted in lockstep with his successor. Nevertheless, the session report evidenced prior fractures within the central bank’s leadership, grounded in a series of dissenting votes registered since July by members advocating for an interest rate cut.
According to metrics from the CME FedWatch tool following the press conference, traders estimate an 18% probability that the Federal Reserve will execute an interest rate hike in the next monetary policy meeting scheduled for the month of July.
