Fed Leaves Interest Rates Unchanged, But More Hikes Still on the Table - Here is How Bitcoin (BTC) Reacted
As expected, the Federal Reserve (Fed) left benchmark interest rates in the US unchanged at 5.25-5.5% on Wednesday.
Bitcoin (BTC) fell just over 1% and was last trading just under $27,000, though still remains fairly close to monthly highs.
Despite the pause, Fed Chairman Jerome Powell said in his post-policy announcement remarks that another interest hike later this year remains possible, with analysts thus referring to Wednesday’s Fed announcement as a “hawkish pause”.
In the Fed’s updated dot-plot – a chart released quarterly that summarizes where Fed policymakers project US interest rates will be in the coming years – 12 of 19 Fed policymakers predicted another 25-bps interest rate hike this year.
The new dot-plot signaled that Fed policymakers expect just two rate cuts in 2024, down from the previous projection of four.
Fed policymakers also upped their growth expectations for the US economy, expecting growth of 2.1%, reflecting increased confidence at the central bank that a “soft-landing” for the US economy can still be achieved.
A “soft landing” is defined as the Fed managing to bring inflation back under control with its interest rate hikes without pushing the economy into recession.
The updated dot plot and economic projections appear not to have surprised the market much, with macro investors having seemingly spent the last few week pricing in a higher-for-longer interest rate scenario from the central bank.
The US Dollar Index (DXY) help above 105, close to six-month highs, while the US 2-year government bond yield held above 5.1% and close to 22-year peaks.
The latest policy announcement appears not to have impacted sentiment in the Bitcoin market too much.
While the Fed’s sudden policy shift towards an aggressive
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