TLDR
- The Federal Reserve kept interest rates unchanged at 5.25%-5.50% range.
- Fed officials predicted only one rate cut in 2024, down from the three rate cuts they forecast in March.
- Bitcoin’s price remained relatively steady after the Fed’s decision, rising slightly by around 3.5%.
- Stock indices like the S&P 500, Nasdaq, and Dow Jones rallied after the Fed’s announcement.
- The Fed acknowledged “modest further progress” toward its 2% inflation target, but inflation remains elevated.
The cryptocurrency market experienced a relatively calm reaction following the Federal Reserve’s decision to maintain interest rates at their current levels on Wednesday, June 12, 2024.
The central bank’s Federal Open Market Committee (FOMC) voted to keep the benchmark federal funds rate within the range of 5.25% to 5.50%, a level that has remained unchanged since July 2023.
Bitcoin, the world’s largest cryptocurrency by market capitalization, saw its price rise slightly by around 3.5% in the immediate aftermath of the Fed’s announcement.
The digital asset traded at approximately $69,159 in the hours following the FOMC meeting, indicating a modest but positive response from crypto investors.
The Fed’s decision was widely anticipated by market analysts, with the majority predicting a pause in the central bank’s rate-hiking cycle.
The FOMC’s updated economic projections revealed a downward revision in the expected number of rate cuts for 2024. Fed officials now anticipate only one rate cut this year, down from the three cuts they had forecasted in March.
This adjustment in the Fed’s outlook suggests a more hawkish stance on inflation, reflecting the central bank’s ongoing concern about elevated price pressures in the economy.
In its statement, the FOMC acknowledged that “recent indicators suggest that economic activity has continued to expand at a solid pace,” with strong job gains and a low unemployment rate.
The Fed also noted that “inflation has eased over the past year but remains elevated,” and that there has been “modest further progress” toward its long-term target of 2% inflation.
This acknowledgment of persistent inflationary pressures likely contributed to the Fed’s decision to maintain a restrictive monetary policy stance for the time being.
The cryptocurrency market’s muted reaction to the Fed’s decision could be interpreted as a sign of resilience and maturity. In the past, major policy announcements from central banks have often triggered significant volatility in digital asset prices.
However, this time, the market appeared to absorb the news without any dramatic swings, suggesting that crypto investors may be becoming more accustomed to navigating a complex macroeconomic environment.
In addition to the relative stability in the crypto market, traditional equity indices reacted positively to the Fed’s announcement. The S&P 500, Nasdaq Composite, and Dow Jones Industrial Average all rallied, with the tech-heavy Nasdaq leading the way with a 1.7% gain.
This upward movement in stocks could be attributed to investors’ relief that the Fed refrained from further rate hikes, which could have dampened economic growth prospects.
