The U.S. Federal Reserve (Fed) made the expected decision at 3 a.m. this morning, choosing to keep the federal funds rate unchanged in the range of 5.25% to 5.5%. This is the fourth time.
Although the Federal Open Market Committee (FOMC) said in a subsequent policy statement that inflation remained a high priority, when discussing central bank policy, officials deleted the statement from last month that they considered "any additional policy tightening." ” language, which further rules out the possibility of future interest rate hikes.
Powell pours cold water on March rate cut
However, the latest policy statement did not explicitly imply a rate cut. Powell said only that the Fed may have completed all the rate hikes needed in this tightening cycle. If the economy develops as expected, it may be appropriate to initiate easing policy at some point this year, he said. However, he also expressed reservations about the market's optimistic expectations for a rate cut in March. He said that at today's meeting, he believed that it would be difficult for the committee to reach a sufficient level of confidence to decide on a rate cut at the March meeting, and this requires further observation.
Finally, Powell pointed out that the United States is not yet ready to declare that the economy has achieved a soft landing, believing that there is still some way to go.
Bitcoin fell to $42,220
Powell dispelled the market’s optimistic expectations for a rate cut in March, causing both U.S. stocks and Bitcoin to plummet. Before the Fed announced the news, the highest price of Bitcoin reached $43,745, but then fell rapidly. At the time of writing, the lowest price hit $42,220, a drop of 1.22% in the past 24 hours.
U.S. stocks fell sharply in late trading:
The Dow Jones index fell 317.01 points, or 0.82%, to close at 38,150.3 points
The Nasdaq fell 345.89 points, or 2.23%, to close at 15,164.01 points
The S&P 500 index fell 79.32 points, or 1.61%, to close at 4,845.65 points
The Philadelphia Semiconductor Index fell 59.07 points, or 1.37%, to close at 4,260.92 points
The market is betting on the chance of a rate cut in March
As Fed officials They seem to be still conservative about cutting interest rates. According to FedWatch data from the CME Group, the probability that the Federal Reserve will keep interest rates unchanged at the next March meeting is expected to reach 47%, and the probability of cutting interest rates by 1% has increased from 1% to 1%. It dropped from 73.4% a month ago to the current 53.0%.
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