Connect with us


Fed Keeps Interest Rates Stable – Bitcoin Loses Recent Gains

Despite easing inflation, the US Federal Reserve plans only one interest rate cut in 2023, leaving rates at 5.25-5.50%. For 2024, one cut is expected, down from three previously planned. Fed Chair Jerome Powell highlighted the need for sustained positive data to achieve the 2% inflation target. Bitcoin’s price fell post-announcement.




Despite recent signs of an easing in prices, the US Federal Reserve is only planning one interest rate cut this year. The monetary authorities around Federal Reserve Chairman Jerome Powell left the key interest rate in the range of 5.25 to 5.50 percent on Wednesday.

For 2024, they are forecasting on average only one further interest rate cut, while three cuts were planned in March. A few hours before the decision, they received current consumer price data that showed an unexpected drop in the inflation rate to 3.3 percent in May. Powell described this drop as encouraging, but stressed that further positive data was needed to ensure that inflation is moving sustainably towards the target of two percent.

Fed decision affects the price of Bitcoin

Powell remained vague about a rate cut expected by the financial markets for September: The Fed does not want to commit itself in advance. The signals from the central bank leadership are mixed: four of 19 monetary authorities do not foresee any rate cuts at all for 2024, seven are planning a cut, and the remaining eight are aiming for two interest rate cuts.

Powell explained that the monetary authorities had the opportunity to adjust their projections at short notice based on the new inflation data, but the majority decided against it. LBBW economist Elmar Völker concluded that the majority of US central bankers are still sticking to the prospect of a rate cut this year, but are signaling less potential for monetary easing: “An indication that the path to the first rate cut is longer than previously assumed.”

Powell confirmed this assessment to the press and said that the monetary authorities were surprised by the worse-than-expected inflation data in the first quarter. Now they must wait and see how inflation continues. The latest inflation data are “a step in the right direction,” but the Fed cannot react to just one data point.

Bitcoin gave up most of the gains it had made after the announcement of the new inflation figures following Jerome Powell’s press conference. The oldest cryptocurrency’s price was last quoted at $67,851.89. (As of 1:46 p.m.) Since the beginning of the year, Bitcoin has recorded a price gain of around 60 percent.


(Featured image by  engin akyurt via Unsplash)

DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.

This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.

First published in WirtschaftsWoche. A third-party contributor translated and adapted the article from tthe original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us

Sharon Harris is a feminist and a part-time nomad. She reports about businesses primarily involved in tech, CBD, and crypto. She started her career as a product manager at a Silicon Valley startup but now enjoys a new life as a personal finance geek and writer. Her primary aim is to provide readers with a new perspective on the overlapping world of finance and technology.