Bitcoin
Bitcoin (BTC) Price Gives Back Gains on Aggressive Fed Outlook
As expected, the U.S. Federal Reserve’s Federal Open Market Committee on Wednesday maintained its federal funds benchmark rate range between 5.25% and 5.50%, but its economic outlook now calls for just one cut. of 25 basis points in rates this year.
“In recent months, there has been modest progress toward the Committee’s 2 percent inflation target,” the FOMC said in its report. policy statement. The “modest” wording is notable because the previous policy statement complained of a “lack of progress” towards lower inflation.
Updating your economic projections, the Fed’s median expectation for the year-end 2024 federal funds rate is now 5.1%, up from 4.6% three months ago. This means the central bank is now only anticipating a 25 basis point rate cut this year, down from 75 basis points previously. The federal funds expectation for year-end 2025 is now 4.1%, suggesting 100 basis points in rate cuts next year.
In his post-meeting press conference, Fed President Jerome Powell said that inflation remains too high and that the central bank’s focus continues to be on returning that indicator to its 2% target.
Earlier today, the US Consumer Price Index report for May showed an unexpected slowdown in last month’s inflation. The news sent cryptocurrency, stock and bond markets rising sharply as traders raised their expectations for the start of Fed rate cuts.
The aggressive turn in the Fed’s economic projections, later confirmed by Powell at his press conference, slowed the momentum of these recoveries. Bitcoin (BTC) at 19:00 UTC it returned to $67,300, stable over the last 24 hours. US stocks and bonds closed the day with gains, but far from the session highs.
Update (19:15 UTC, 06/12/24): Adds comments from Powell press conference and price reaction.