The Federal Reserve Keeps Interest Rates Unchanged, Optimism in the Market Boosts Stock Prices and Currency Exchange

The Federal Reserve of the United States announced that it will maintain interest rates at a high level of 5.25% to 5.5%, but it believes that the risks of achieving employment and inflation goals are moving towards a better balance. The US stock market surged, with the S&P 500 index breaking through the historic 5,200 points, and the Dow also closed at a historic high. Bitcoin and Ethereum plummeted yesterday due to news of ETF outflows and difficulties with the Ethereum spot ETF, but they rebounded in the evening with the overall market sentiment.

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FED Maintains Interest Rates, Expects Three Rate Cuts This Year
Bitcoin and Ethereum Plunge and Rebound Yesterday
Federal Reserve Statement

The statement pointed out that recent indicators indicate that economic activity has been steadily expanding. Employment growth remains strong, and the unemployment rate remains low. Inflation has slowed over the past year but remains at a high level. The committee judges that the risks of achieving employment and inflation goals are moving towards a better balance.

According to CNBC’s report, Chairman Powell stated in a press conference after the meeting that although inflation data rose in January and February, it did not change the overall downward trend, but only proved the non-linear path of inflation.

I believe they have not really changed the overall situation, that is, inflation gradually declining to 2% on a sometimes bumpy road. We will not overreact to the data of these two months, nor will we ignore them.

Powell reiterated that if the economy continues to grow, policymakers still intend to cut interest rates by the end of this year, and expressed confidence in the Fed’s 2% inflation target.

The rate dot plot released this time still shows the probability of three rate cuts this year, which also boosted investors’ confidence in a rate cut in June. According to CME FedWatch data, investors believe that the probability of a rate cut in June is over 70% (compared to 50% two weeks ago).

Bitcoin was affected by the continuous outflow of Bitcoin spot ETFs and fell to $60,775 yesterday, but it gradually rebounded above $67K in the evening with the boost of market optimism.

(Ethereum ETF outflows for two consecutive days, BTC falls below $61K, with the largest daily drop since the FTX incident)

Ethereum also briefly fell to $3,056 yesterday, a 20% drop in a week. Chain News analyzed yesterday that this may be due to the decreased probability of the Ethereum spot ETF passing and the gradual decline of the repledging trend. Fortune reported last night that the U.S. Securities and Exchange Commission (SEC) is conducting an in-depth investigation into Ethereum, and speculates that this is not just a routine inspection. The SEC may want to classify Ethereum as a security, which could have a huge impact on the dream of launching an Ethereum ETF.

However, ETH is still driven by the overall market sentiment and has returned to around 3,500 points.

(Ethereum’s 20% drop in a week: Reasons include difficulty passing Ethereum spot ETF and fading repledging trend)

(Fortune: Ethereum under close scrutiny by SEC, attempting to classify ETH as a security)

ETH
FED
Rate cut
Powell

Further reading:
Fed’s Central Bank Digital Currency Research: Will CBDC Affect the Status of the US Dollar? What Kind of CBDC Will Succeed?
“Pass the Stablecoin Act Quickly!” Federal Reserve Chairman Powell Urges Congress to Speed Up Regulation of Stablecoins