- According to CME Fedwatch Tool, the market expects a 97.2% probability of the Fed keeping its policy interest rates in the current range of 5.25% to 5.50%.
- Given rising bond yields, declining inflation, and increasing geopolitical concerns, if this decision goes through, it would mark the second consecutive meeting where the Fed chose not to raise interest rates.
- As mentioned earlier, the market appears to be preparing for volatile trading in the digital asset space ahead of the FOMC decision expected later today.
Markets await today’s US Federal Reserve interest rate decision; Bitcoin and cryptocurrencies are declining before the FED’s decision.
FED Will Announce Interest Rate Decision Today
The Federal Reserve is expected to announce its decision on policy interest rate changes while considering the current economic health. Despite still-high inflation that has wiped out negative sentiment in the market throughout the year, it has still removed significant gains from the global financial markets, let alone the crypto market.
The market expects a dovish statement from the Fed, but another move could trigger selling in the market. Particularly, according to the CME Fedwatch Tool, the market expects a 97.2% probability that the Fed will keep its policy interest rates in the current range of 5.25% to 5.50% and sees only a 2.8% probability of another 25-basis-point increase.
With that in mind, many analysts believe that the Federal Reserve will likely keep the current interest rates at its November policy meeting. Given rising bond yields, declining inflation, and increasing geopolitical concerns, if this decision goes through, it would mark the second consecutive meeting where the Fed chose not to raise interest rates. Currently, the U.S. 10-year Treasury yield has risen by 0.55% to 4.904%.
For investors, the focus will be on the Federal Open Market Committee’s statement and the remarks of Fed Chairman Jerome Powell following the meeting’s conclusion. These statements will provide insights into the possibility of an interest rate increase at the year-end meeting in December.
While the U.S. economy continues to perform strongly, Fed officials have emphasized the need for an economic slowdown to curb inflation and bring it in line with the central bank’s 2% annual target. Despite a 5.25-point increase in the federal funds rate since March 2022, the economy has remained robust. In recent months, inflation has slightly eased, but bringing it closer to the 2% target has proven challenging.
The U.S. GDP grew at a rate of 4.9% in the third quarter, supported by strong consumer spending, highlighting its resilience. The labor market is characterized by low unemployment, increased job openings, and rising wages. These recent economic indicators suggest that the Federal Reserve is likely to lean towards not lowering interest rates in the near future.
How Is the Crypto Market Doing?
As mentioned earlier, the market appears to be preparing for volatile trading in the digital asset space. The market saw gains in the previous session but has since moved south.
Reportedly, the global crypto market capitalization has fallen by 0.50% to $1.27 trillion, with a daily trading volume decreasing by 4.68% to $37.85 billion. In particular, the fear and greed index remains at 72, indicating bullish market sentiment among traders.
The larger market losses are due to the significant losses in major cryptocurrencies today. For example, as of writing, the price of Bitcoin has fallen by 1.10% to $34,250, with a trading volume dropping by 18.09% to $13.92 billion.
Considering the current market sentiment, it appears likely that the Fed will keep interest rates at the highest level in 22 years to control inflation. However, it is important for investors to exercise caution, as another decision could have a negative impact on broader financial markets.
