The US Federal Reserve has kept its benchmark interest rate between 5.25% and 5.50% at the latest Federal Open Market Committee (FOMC) meeting, in line with expectations.
The announcement saw a slight shift in the committee’s language, moving from acknowledging a “lack of progress” to recognizing “modest progress” towards the 2% inflation target.
Over the past few months, modest progress has been made towards the committee’s 2% inflation goal.
Adjusted Economic Outlook
The Fed’s latest economic projections reveal adjustments in rate expectations for the years ahead. While the median forecast for the federal funds rate at the end of 2024 was raised to 5.1% from 4.6% three months ago, indicating the central bank now foresees a single 0.25% rate cut this year, down from the previously anticipated 0.75%.
For 2025, the forecast stands at 4.1%, suggesting a total reduction of 1% next year.
Market Reactions and Outlook
The unexpected slowdown in inflation in May, as shown in the latest Consumer Price Index report, initially led to a sharp rise in crypto markets, stocks, and bonds, with traders adjusting their expectations upwards for the Fed’s impending rate cuts.
However, the upward revisions in rate projections for 2024 have slightly dampened Bitcoin‘s momentum. US stocks, on the other hand, continue to show a strong uptrend.
