Federal Reserve Pauses Interest Rate Hikes For The First Time Since March 2022

Key Points:

• The US Federal Reserve maintains interest rates at 5.25% to 5.50%, surprising markets by not raising them for the first time since March 2022.
• Fed Chair Jerome Powell stresses the need for cautious policy adjustments while combating persistent inflation levels.
• Cryptocurrency markets, led by Bitcoin, remain steady initially but dip slightly to $27,100 as Powell hints at potential future rate hikes.

In a significant move, the cryptocurrency market, particularly Bitcoin, has exhibited resilience in the wake of the US Federal Reserve‘s decision to maintain its benchmark interest rates. The Federal Open Market Committee (FOMC) confirmed that interest rates would remain steady at 5.25% to 5.50%.

As anticipated by financial experts, this marks the first time since March 2022 that the Fed has chosen not to raise interest rates. US Federal Reserve Chairman Jerome Powell, addressing the decision, highlighted the need for cautious policy adjustments, despite a cumulative 525 basis point increase in the policy rate since March 2022.

“We’re in a position to proceed carefully in determining the extent of additional policy firming,” Powell stated. However, he emphasized the central bank’s commitment to combatting inflation, stating, “We want to see convincing evidence that we have reached the appropriate level, and we need to see more progress before we’ll be willing to reach that conclusion.”

This decision arrives amid consistent inflation levels exceeding the central bank’s targets, even as the US economy displays resilience. Previously, the Fed rapidly increased interest rates from 0.25% to 5.5% over 18 months to address inflation, paralleling the post-2008 financial crisis period but with a swifter adjustment pace.

Economists speculate that the Fed will maintain interest rates between 5.25% and 5.5% throughout 2023, potentially reconsidering its stance in 2024 with an inclination toward reducing interest rates. Some even predict interest rate cuts of up to 0.75% in 2024.

Bitcoin’s price initially remained stable at around $27,200 following the Fed’s announcement but later dipped to $27,100 as Powell hinted at further rate hikes should the economy outperform expectations. The cryptocurrency market’s resilience underscores its capacity to weather macroeconomic shifts.

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