Breaking: Bitcoin price shoots to $42,800 as FOMC keeps interest rates unchanged
- The Federal Reserve kepts interest rates unchanged for the third meeting in a row as expected on Wednesday.
- Officials left the fed funds rate unchanged at 5.25% - 5.50% with openness to adjust based on market conditions.
- Powell admits that the US economy could fall into recession in 2024, an event that would trigger largescale rate cuts.
- Bitcoin price has reacted with a quick jump to $42,800 amid rising volatility as the minutes met expectations.
The Federal Open Market Committee (FOMC), an arm of the Federal Reserve (Fed), has refrained from a rate hike once again, keeping it steady at $5.25%-5.50%. Fed Chair Jerome Powell sounded less hawkish at his press conference following the interest rate decision.
This is the third consecutive time the Fed has resorted to keeping interest rates unchanged. It points to an easing monetary policy despite the central bank remaining focused on bringing inflation down to 2%.
It also points to the Fed being done raising rates after imposing the fastest series of increases in four decades as it ferociously fought high inflation since the middle of 2022.
The efforts to wave off inflation continue, with the Fed trying not to do further damage to the economy by increasing job losses in the process. According to Powell, this seems to be working as the development of the labor market is improving.
Nevertheless, Powell reiterated that the Fed is prepared to tighten policy further if necessary as inflation, though easing, remains high and the path forward is uncertain.
Powell also observed that it is a "real possibility" that the US economy moves into recession in the next year.
Looking forward, the jobs market and GDP remain strong in the US, according to Powell. Interest rates could remain elevated potentially across the first six months of 2024.
Reports indicate that the Fed could announce two interest rate cuts in 2024, but Jerome hinted at a possible third, articulating that the decision is independent of the oncoming US elections.
Bitcoin price reacted to the FOMC minutes with volatility, rising to record an intra-day high of $42,886 before a quick retraction.
BTC/USDT 1-day chart
At the time of writing, Bitcoin price is trading at $42,694.
(An earlier version of this story incorrectly said that the US Federal Reserve published the minutes of its November meeting. Instead, the Fed issued the monetary policy statement after the December meeting.)
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
