[NEWS] FOMC maintains three interest rate cuts in 2024; optimism grows, cryptocurrency prices rise sharply

On the 20th, the Federal Open Market Committee (FOMC) maintained its previous forecast of three 0.25-point interest rate cuts in the future.

On the other hand, the number of interest rate cuts in 2025 was initially expected to be four, but given the rise in inflation, which has raised concerns again, it is now more likely that the number will be reduced to three.

The FOMC also decided to keep the key policy interest rate unchanged at this meeting. This is the fifth consecutive meeting in which interest rates have been kept unchanged, and all committee members supported this. The target range for the Federal Funds (FF) rate is 5.25% to 5.5%. It was suggested that there is no change in the policy to cut interest rates for the first time since March 2020 within this year.

At a press conference after the meeting, FRB (Federal Reserve Board) Chairman Jerome Powell avoided a direct answer to a question about whether the policy interest rate would be cut at the FOMC meeting in May or June. He also repeated his previous statement that the first rate cut would likely be "at some point this year," and did not specify it.

He also said he was not particularly concerned by recent data showing inflation rising. "It is likely that most people believe that we have reached that level of confidence and that a rate cut will be implemented," he said.

Chairman Powell also said, "The data support the FOMC's cautious approach to initiating rate cuts," adding that officials would like to see more evidence that inflation is progressing toward the 2% target.

The content of this statement is almost the same as that in January. He continued, "The Committee does not believe that a reduction in the target range would be appropriate until it has greater confidence that inflation is moving toward the 2% target."

Bitcoin and other cryptocurrencies also rise sharply

As it became clear that the FOMC's rate cut course was unchanged, the price of cryptocurrencies (virtual currencies), including Bitcoin (BTC), rose. Bitcoin briefly approached $61,000 (approximately 9.2 million yen), but due to factors such as the policy on interest rate cuts, it has risen to about $67,500 (approximately 10.2 million yen) at the time of writing.

Altcoins are also rising in price, and Ethereum (ETH) temporarily fell to around $3,200 (approx. JPY 483,000), but has since recovered to around $3,500 (approx. JPY 530,000).

The Dow Jones Industrial Average and other indexes have also recovered significantly, and the market may swing strongly to a risk-on position. It is possible that this impact will extend to the cryptocurrency market as well.

Reference: Announcement
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