July 24, 2024

Bitcoin swiftly rallied above $59,000 after Fed held rates steady

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Bitcoin’s price briefly soared to $59,300 following a selloff that dipped it below $56,700 earlier today, according to CoinGecko’s data. The resurgence came after the Federal Reserve (Fed) had decided to maintain interest rates between 525 and 550 basis points.

In a statement announcing the hold, Powell said the decision to hold rates steady was due to high inflation. As he noted, the Fed plans to continue reducing public bond sales, yet the remaining bonds continue to be sold at the same pace.

“Today, the FOMC decided to leave our policy interest rate unchanged and to continue to reduce our securities holdings, though at a slower pace,” stated Powell, “…in recent months inflation has shown a lack of further progress toward our 2 percent objective, and we remain highly attentive to inflation risks.”

Powell noted the solid pace of economic expansion, strong job gains, and low unemployment, despite inflation remaining above the desired 2 percent target.

“Economic activity has continued to expand at a solid pace,” he said. “Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated.”

According to him, inflation has exceeded expectations in the short term, yet aligns with long-term forecasts. Due to these higher-than-anticipated inflation indicators, the central bank remains hesitant to lower interest rates.

The Fed has indicated that it will maintain elevated interest rates for an extended period. However, it also noted that it would consider adjusting its policy should there be an increase in unemployment.

Fed Chair: “I don’t see the stag or the flation”

In contrast to the previous belief that Powell could have a hawkish stance, he maintained a neutral stance during his speech today.

Addressing a series of questions from the media about the state of the world’s economic powerhouse, Powell said there is a low likelihood of raising interest rates further, as current data does not support such a move. According to him, the Fed believes that the current high-interest rates are sufficient to guide inflation back toward the 2% target.

Speaking of stagflation risks, he expressed skepticism about the claim that the US has entered a period of stagflation, which is characterized by high inflation coupled with economic decline.

According to Powell, the defining conditions of stagflation won’t last or fully develop because inflation will eventually decrease.

“I don’t see the ‘stag’ or the ‘-flation’,” Powell said. “I don’t really understand where that’s coming from,” he added.

Despite Powell’s neutral stance, Bitcoin’s regained momentum faltered. After briefly surpassing $59,000, it couldn’t hold above this key level. CoinGecko data shows Bitcoin is currently trading at around $57,300, a 3.4% drop in one hour.

Similarly, top ten altcoins experienced a modest post-Fed decision rally, with gains between 0.5% and 2.5%. However, this short-lived bounce quickly fizzled out.

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