Fed Holds Interest Rates, Bitcoin and Crypto Market Remain Stable

The cryptocurrency market, including Bitcoin, showed no significant negative reaction following the Federal Reserve's decision to maintain interest rates.

Fed holds interest rates, Bitcoin and crypto market remain stable. Photo: AP

As anticipated by financial observers, the U.S. Federal Reserve (Fed) announced its decision to keep interest rates unchanged at 5.5% after its meeting on September 20-21. This marks the first time since March 2022 that the Fed has opted not to raise interest rates.

Previously, in response to inflationary pressures in the United States, the central bank had raised rates from 0.25% to 5.5% in just over a year. The current interest rate level now matches the post-2008 financial crisis era, albeit adjusted much more rapidly.

The Fed's interest rate adjustments from March 2022 to September 2023. Photo: Forbes

The Fed's statement read:

"Recent indicators suggest that economic activity is growing at a steady pace. Job creation has slowed in recent months but remains robust, while unemployment rates remain low. Inflation remains stable.

The U.S. banking system continues to operate effectively without issues. Tightening credit for consumers and businesses may impact economic activity, hiring, and inflation, although the extent of these impacts remains uncertain. The Fed remains highly vigilant regarding inflation risks."

Speaking at a press conference following the decision to maintain interest rates, Fed Chair Jerome Powell stated that the agency had taken decisive actions since starting to raise rates in March 2022. However, the effectiveness of these adjustments over the past year and a half remains uncertain. Powell emphasized that the Fed will continue to monitor inflation developments to determine appropriate policy adjustments.

Nevertheless, Powell maintained a cautious tone regarding future rate hikes:

"We stand ready to raise interest rates if deemed appropriate. We aim to maintain the rate hike policy until we are confident that inflation is contained and on a downward trajectory."

Many economic observers predict that the Fed will maintain interest rates between 5.25% and 5.5% until the end of 2023, reassessing its stance in 2024, potentially starting to reduce rates to a more reasonable level. Some even forecast rate cuts to 0.75% by 2024.

A rate cut would herald a new phase, indicating that the U.S. has moved beyond tightening its economy to combat inflation and could help bolster stock market recovery.

In 2023, the Fed will have two more interest rate adjustments in early November and mid-December.

Bitcoin showed little volatility before and after the Fed's decision to maintain interest rates, hovering within the range of $26,800 to $27,500.

1-hour chart of BTC/USDT pair on Binance as of 05:40 AM on September 21, 2023

Similarly, top market altcoins recorded a calm 24-hour trading session, with trading volume reaching $61.5 million and a nearly balanced long-short ratio.