The Federal Reserve announcement is finally here and thankfully rates will remain the same. The markets are responding appropriately. But for how long?  ?????Boost for #BTC as fed leaves rates unchanged! ??#Bitcoin #Crypto #cryptocurrency #Cryptonews #Economics #Finance #Inflation #FederalReserve https://t.co/RSNiN9qFca — Crypto-N (@crypt0_n) January 26, 2022 The Federal Reserve announced today that interest rates will […] The post Federal Reserve Announces Rates Will Stay The Same; Jerome Powell Responds appeared first on CryptosRus.

Federal Reserve Announces Rates Will Stay The Same; Jerome Powell Responds

The Federal Reserve announcement is finally here and thankfully rates will remain the same. The markets are responding appropriately. But for how long? 

The Federal Reserve announced today that interest rates will remain unchanged. “In support of these goals, the Committee decided to keep the target range for the federal funds rate at 0 to 1/4 percent,” the Federal Reserve said.

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  • However only for now. “The Committee expects that reducing the size of the Federal Reserve‘s balance sheet will commence after the process of increasing the target range for the federal funds rate has begun.” It is expected that the rates will increase in March or May.
  • Bitcoin, and the rest of crypto, has rebounded on the news. However, markets still await Jerome Powell’s official statement on when to expect a rate hike.
  • Bank of Canada announced earlier today that they will be maintaining their current rates as well. 
  • This is a developing story. I will update with Jerome Powell’s statement.

Jerome Powell’s Press Conference

Jerome Powell spoke a half hour after the Federal Reserve announced that rates will remain unchanged. Powell essentially reiterated that the Federal Reserve will not raise rates right now, but will do so at some point in the future. “The best we can do to continue to support labor market gains is to promote a long expansion and that will require price stability,” Powell said.

  • On how the Federal Reserve has approached tapering: The reserve’s “actions have been guided by the desire for maximum employment.” Moreover, Powell  that he best we can do is “to promote a long expansion and that will require price stability.”
  • On it’s current market approach: Powell also added, referring to stable rates and asset purchases, that the “economy no longer needs this highly accommodative policy,” moving forward. But that “it’s going to take some time,” before shifting to a less accommodative policy.
  • On how the reserve plans to deal with potential curveballs: Powell acknowledged the need to be “nimble” and to show “humility” when considering the timing or raising rates.
  • On “Wen rate hike”: “We are going to have another discussion at the next meeting… we will tell you as we make progress.”
  • On why they are not giving a timeframe: the unpredictable nature of the current economic climate thanks to Covid, and the resulting supply chain issues makes it hard to predict on when it will be appropriate to do so.

The Market Responds

After reaching a high of 39k USD after the announcement, Bitcoin responded by falling below 37k after Jerome Powell began speaking.

It appears the market is spooked the by the idea of a potential rate hike, but considering Powell’s wording that it will be gradual, and that Powell wants to be “nimble,” the market appears to be overreacting.

Time will tell how the market reacts now that it knows that a hike is coming at some point in the future.

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