During the last FOMC meeting, which took place on December 13, the regulator made a decision regarding the interest rate. In this regard, Bitcoin temporarily reached $43,000, but then declined.
On December 13, 2023, a meeting of the US Federal Open Market Committee (FOMC) was held. Upon completion, the regulator announced its decision on the interest rate, leaving the indicator unchanged.
BTC $42,894 to this event with a sharp jump. The asset broke through the $43,000 level, but then pulled back. At the time of writing, it is trading at $42,830, according to TradingView:
Let us remind you that the previous meeting took place on November 1, 2023. At that time, the regulator decided to leave the indicator unchanged at 5.25-5.5%.
Read more about how it affects the Bitcoin rate in our material:
We previously covered the forecast of Goldman Sachs economist Jan Hatzius. According to him, the Fed is likely to begin easing policy in the third quarter of 2024.
After the recent rally, the price of Bitcoin dropped sharply, after which the asset partially regained its position. According to Glassnode experts , the upward price trend in the market has “exhausted”, and its main driver was short-term holders.
Speech by the Fed Chairman
After the FOMC meeting, the head of the regulator, Jerome Powell, gave a press conference. The official presented the main economic indicators, spoke about the current policy of the department and answered some questions from journalists.
“Inflation has fallen significantly from this year's high, and this has happened without a significant increase in unemployment. Great news. But inflation remains too high, further progress in reducing it is not guaranteed, and the path to this is not defined,” Powell began his speech.
The Fed Chairman touched on several important topics during his speech. Here are the key points:
- Tight policies put downward pressure on economic activity. The full effect of the regulator's actions is likely to have yet to be seen;
- compared to the third quarter of 2023, the growth of economic activity has slowed down significantly;
- by the end of the year, GDP growth is likely to be 2.5%, supported by strong consumer demand;
- The labor market remains tight. The average increase was 204,000 jobs per month. This is a good indicator, but it is lower than previous values in 2023;
- the unemployment rate is 3.7%. The forecast by the end of 2024 is 4.1%, which is likely to put upward pressure on inflation;
- nominal wage growth is slowing down;
- Long-term inflation expectations are firmly anchored. The regulator welcomes the slowdown in the growth rate of the consumer price index, but this is not enough to lower the interest rate;
- Inflation forecast for 2024 is 2.4%. For 2026 - 2%. Let us recall that this is the level that the Fed sets as its goal when pursuing a “hawkish” policy;
- The regulator believes that the current rate - 5.25-5.5% - is at the peak of the current cycle of tightening financial and credit measures. However, progress towards further achieving inflation is not guaranteed, and the Fed, if necessary, will increase the rate further;
- rate forecast for 2024 is 4.6%. At the end of 2025 - 3.6%. At the end of 2026 - 2.9%. However, this is still above the median long-term rate.
Answering questions from journalists, Powell indirectly confirmed the fact that the regulator had taken a more neutral position.
