FOMC Meeting Anticipation: Interest Rates, Banking Crisis, and Crypto Markets
Investors in the traditional and crypto markets are eagerly anticipating the upcoming Federal Open Market Committee (FOMC) meeting.
This meeting, set to take place on May 2-3, is expected to lead to an increase of 25 basis points in interest rates, even though inflation in the U.S. has been decelerating.
According to Goldman Sachs, the upcoming FOMC meeting will result in a rate increase of 25bps, bringing the range to 5.00-5.25%. However, instead of solely focusing on interest rates, the analysts predict that the meeting will prioritize “revisions to the forward guidance.” Additionally, there may be a signal for a potential pause in interest rates in June due to concerns over bank stress leading to credit tightening.
Various financial experts hold similar opinions. Analysts from CNBC and Reuters have forecasted that the increase in interest rates could be halted after May. Based on a Reuters survey, it is predicted that the Federal Reserve will raise interest rates by 25 basis points in May and maintain this level throughout the remainder of 2023.
In addition, given that the inflation rate in the United States still remains over twice the Fed’s 2% target, a decrease in interest rates appears less likely than an increase. Nonetheless, there are worries that the U.S. economy may fall into a recession earlier than anticipated.
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According to the Reuters poll, the probability of a U.S. recession within the next two years has risen from 65% to 70% in the previous month. This is mainly due to concerns about the banking crisis and inflation.
Many traders speculate about how the FOMC meeting will affect the crypto markets. Some community members believe that a 25 basis point increase might not have much impact on Bitcoin’s price. According to crypto researcher Neel Kukreti, even a 50bps increase would not cause Bitcoin to break $29k levels.
Despite this, traders are still expecting some volatility in response to the FOMC’s announcements, as these tend to impact the markets. At press time, Bitcoin was trading at $28,028, down by 1.9% in the last 24 hours. The cryptocurrency currently faces support at $27,844, with resistance at $28,384.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
