As a seasoned crypto investor with a background in economics, I closely monitor the Federal Reserve’s actions and their impact on digital assets like Bitcoin. Based on the latest analysis from experts like Tomo and the ING team, I believe that the upcoming FOMC meeting is not expected to bring major surprises for those looking for drastic changes in interest rates or policy.
As a financial markets analyst, I’m closely monitoring the upcoming FOMC meeting on June 12th, with keen interest from the Bitcoin and crypto community. Although the consensus forecast indicates that the Federal Reserve will keep the federal funds rate unchanged between 5.25%-5.50%, the real focus lies in the intricacies of the Fed’s forward guidance and economic projections.
Crypto analyst Tomo (@Market_Look) expressed his views on X, describing the upcoming FOMC meeting as an event with minimal impact for those anticipating significant shifts. He explained, “It’s unlikely that interest rates will change (remaining at 5.25%-5.50%). The statement and economic forecast are expected to stay the same. However, the dot chart is predicted to take on a more hawkish stance.”
Tomo pointed out the projected modifications in interest rate forecasts for the upcoming years, adding, “The number of rate reductions is predicted to decrease from three in 2024 to two. An unexpectedly aggressive move would be just one cut.” He elaborated that these anticipated changes have already been factored into market expectations, resulting in muted reactions and reduced market turbulence.
” starting in March, there are nine individuals advocating for no change or reducing the rates twice, while there are ten individuals supporting the proposal to decrease rates by three or more occasions. This represents a change from three to two advocates for the latter option, which has already been taken into consideration.”
ING’s economic team, comprised of James Knightley, Padhraic Garvey, CFA, and others, hold a shared viewpoint on the Federal Reserve’s possible actions. They forecast that the Fed will emphasize caution due to ongoing inflation and robust employment data. As a result, they predict that the Fed may postpone any planned interest rate cuts to a later date.
The ING team explained their perspective, stating that the US Federal Reserve acknowledges the restrictive nature of monetary policy but, due to persistent inflation and robust employment figures, is likely to signal a delay in contemplating potential interest rate reductions.
The dot plot, expected to display the separate rate forecasts of FOMC members, may indicate a decrease in the predicted number of interest rate reductions for the year 2024 – potentially from three to just one or two.
As an analyst, I’ve noticed that Nick Timiraos from the Wall Street Journal reported recently that JPMorgan and Citigroup have retracted their projections for a July rate cut based on the latest jobs report. However, most economists and experts, including those on the sell-side, now expect the Federal Reserve to make one or two interest rate reductions sometime in September or December this year.
JPM and Citi scrapped their calls for a July rate cut after last Friday’s jobs report.
Many economists and experts who work for brokerage firms, along with other Federal Reserve observers, expect the Federal Reserve to reduce interest rates by 1-2 percentage points sometime in September or December of this year.
— Nick Timiraos (@NickTimiraos) June 10, 2024
Impact On Bitcoin And Crypto
In simpler terms, the value of Bitcoin and other cryptocurrencies can be significantly influenced by major economic news. The expectation of central banks adopting a more accommodative monetary policy, such as cutting interest rates, might devalue the US dollar and make cryptocurrencies, like Bitcoin, more appealing as investment options.
In other words, if the Federal Open Market Committee (FOMC) takes a firm stance on keeping interest rates unchanged or even raising them higher than anticipated, this could boost the US dollar and put downward pressure on cryptocurrencies. However, the intricacies of the FOMC members’ views, as shown in the dot plot and economic forecasts, might offer insights into the future direction of US monetary policy. These indicators could influence investor confidence in the crypto markets.
As a crypto investor, I believe that a more aggressive approach from the Federal Reserve towards interest rates could lead to a stronger US dollar and potential downside for Bitcoin and other cryptocurrencies. On the other hand, if the Fed takes a more lenient stance on rate increases or hints at future rate cuts, it could provide a boost to the crypto market.
At the FOMC press conference, Jerome Powell’s words as Chair will carry great weight, shaping the market mood and forecasts. Market players will scrutinize his speech for any hints of change in his perspective on inflation, economic expansion, and potential monetary policy modifications. The meaning behind these statements could trigger substantial price fluctuations in Bitcoin and cryptocurrencies.
The upcoming CPI data for May 2024, to be released right before the Federal Open Market Committee (FOMC) meeting, holds significant importance. This information will greatly impact the FOMC’s deliberations by offering valuable context, helping them determine if their current monetary policy stance continues to be suitable.
At press time, BTC traded at $67,707, down -3.5% since yesterday’s high at $71,200.
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2024-06-11 10:34