Interest rate cuts could come as early as 2025, Fed Chair Jerome Powell

Federal Reserve chair Jerome Powell has said 2023 may not be the year the agency reduced the interest rate, speculating a two-year wait before such an outcome. The assertion came during the Federal Open Market Committee (FOMC) meeting on June 14 at 2:00 pm EST.

Also Read: Federal Reserve meeting news conference: Powell speaks on policy outlook

Federal Reserve keen to maintain price stability

Federal Reserve chair Jerome Powell has put out any hopes the market may have for a rate cut in 2023, saying it may not be the ideal time for such an action. According to the agency, the 5% will stick until a notable change occurs. This articulation clarifies hopes that go back to March 2023, when market participants anticipated at least four rate cuts before the end of the year.

The move is part of the Fed's commitment to maintain price stability, which it believes is crucial for the economy to work. Notably, this is one of the agency's key mandates aside from pushing toward full employment.

It is worth noting that the current pause comes after a series of ten consecutive interest rate hikes. To the naked eye, the move is meant to give the economy a resting phase from the prevailing pressure. However, experts say this decision is a calculated move to give the central bank a chance to evaluate the impact of the aggressive tightening efforts that have been employed recently.

While the sudden turn of events is a clear pardon for the traditional finance (TradFi) market, there is currently no expectation that this will rule out increases later this year. 

As reported, "The Summary of Economic Projections showed that the terminal rate projection for end-2023 was revised to 5.6% from 5.1% in March. Similarly, the end-2024 rate forecast rose to 4.6% from 4.3%. In summary, Fed projections imply two more 25 basis points (bps) rate hikes this year and 100 bps rate cuts in 2024."

Crypto market reaction to FOMC

TradFi's immediate reaction was bullish, as indicated by the US Dollar (USD), which gathered strength to suggest a hawkish takeaway. However, the crypto market slumped further, recording significant price shifts to continue the downtrend. Bitcoin (BTC), Ethereum (ETH), and Ripple (XRP) are down a steady 3.5%, 5.0%, and 10.3%, worse than pre-release rates. For BTC, the critical support zone lies between $18,982 and $24,885, as shown by IntoTheBlock's GIOM metric.

Any efforts to push Bitcoin price below this zone would be countered by buying pressure from approximately 5.89 million addresses that bought around 2.29 million BTC at an average price of $21,640.