Federal Reserve Keeps Interest Rates Unchanged, Pauses At 5%-5.25%! Bitcoin Price Reacts

The post Federal Reserve Keeps Interest Rates Unchanged, Pauses At 5%-5.25%! Bitcoin Price Reacts appeared first on Coinpedia Fintech News

In a move that has sent bullish waves through the US financial world, the Federal Reserve has recently announced its decision to maintain interest rates at their current level, between 5% and 5.25%. This decision, which comes amidst a tumultuous economic climate, has been met with a sigh of relief by many, particularly those within the cryptocurrency market.

Fed Hints At Tightening Measures To Curb Inflation

On Wednesday, after 15 months of consistent interest-rate hikes, officials from the Federal Reserve decided to take a break. However, they indicated that they would probably continue with the tightening measures to curb inflation, forecasting more increases than what economists and investors had anticipated.

The Federal Open Market Committee, in a statement issued in Washington on Wednesday, stated, “By keeping the target range unchanged at this meeting, the committee can evaluate further information and its impact on monetary policy.”

The U.S. Federal Reserve decided to maintain its benchmark fed funds rate range at 5.0-5.25%. This decision was made in recognition of the importance of allowing sufficient time to evaluate the effects of previous monetary tightening measures on the economy.

In an effort to curb inflation, which was previously exceeding 8% on an annual basis, the Federal Reserve embarked on a series of monetary tightening measures starting in March 2022. Over the course of 10 consecutive meetings, they gradually increased interest rates, elevating the fed funds rate from 0-0.25% to its current range of 5.0-5.25%.

Inflation has exhibited a gradual deceleration over the past year, as evidenced by the Consumer Price Index (CPI) report released on Tuesday, which indicated a decline to 4% in May, the lowest level observed in two years. While this rate remains above the central bank’s targeted 2% inflation rate, the Fed has emphasized that monetary policy often operates with a considerable time lag. Consequently, as the recent rate hikes permeate through the economic system, it is expected that inflation will continue to decrease.

Bitcoin Price Shows Extreme Volatility At $26K

The bear market in Bitcoin, characterized by a significant decline in its price from an all-time high of approximately $69,000 in late 2021 to around $26,000 at present, can be attributed, in part, to the Federal Reserve’s aggressive series of interest rate hikes.

However, the prospect of the central bank potentially easing its monetary tightening measures presents one of the optimistic scenarios for Bitcoin in 2023 and beyond.

Following the news, Bitcoin price is displaying extreme volatility below the $26K mark and it is currently hovering near $25,843.

The Federal Reserve’s decision to keep interest rates unchanged is a positive development for the crypto market. It creates an environment that is conducive to investment in cryptocurrencies, and signals a level of economic stability that can help to mitigate the perceived risks associated with these digital assets.

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