Bitcoin Climbs After Fed Holds Interest Rates Steady

The Federal Open Market Committee (FOMC) has decided to keep the benchmark federal funds rate unchanged at 4.25% to 4.50%.

The Federal Open Market Committee (FOMC) has decided to keep the benchmark federal funds rate unchanged at 4.25% to 4.50%. This decision, announced on Wednesday, will see the Fed hold off on any further adjustments to interest rates for now.

The move comes amid mixed signals on inflation, employment, and broader economic momentum. Recent data indicates that the U.S. economy continues to grow at a solid pace, despite fluctuations in net exports. Fluctuations in net exports had been anticipated following a decline in the fourth quarter.

Moreover, the unemployment rate remains low, and the labor market appears to be running "stable and broadly balanced," as the Fed noted. However, inflation remains above the central bank’s long-term goal of 2%, suggesting that pricing pressures are continuing to exert pressure.

"The stance of monetary policy will continue to depend on the totality of the incoming data and on the evolving outlook for economic activity, labor market conditions, and inflation toward the Committee's goals of maximum employment, price stability, and a long-term federal funds rate of 2.5%. In assessing the economic outlook, the Committee will continue to monitor inflation developments and anticipates that adjusting the federal funds rate will be appropriate later this year to return inflation to 2%.

The central bank is aiming to achieve both maximum employment and inflation near 2%, but balancing both has become more difficult. "The economic outlook presents ongoing challenges and imbalances that must be navigated in achieving both maximum employment and inflation near 2 percent," the Fed stated in its post-meeting statement.

The Fed also noted that it had begun reducing the size of its Treasury bond holdings this month as part of plans to unwind the massive balance sheet built up during the pandemic to prop up the economy.

"The Committee is reducing the size of the Federal Reserve's Treasury security and agency mortgage-backed security holdings, as described in the Summary of Economic Projections (SEP) and Economic Projections in December 2022. Commencing this month, the net portfolio holdings will be adjusted downward in a predictable manner over time.

"The adjustments in the pace of reducing the size of the Federal Reserve's Treasury security and agency mortgage-backed security holdings announced today will depend on the evolving economic outlook and are intended to minimize any undue interruption to the smooth functioning of the Treasury and agency mortgage-backed security markets."

The FOMC statement and updated economic projections will be released at 2:00 PM ET (18:00 GMT). A press conference by Fed Chair Jerome Powell is scheduled for 2:30 PM ET (18:30 GMT).

Bitcoin Price Today: BTC Surmounts $96K as Fed Keeps Rates Unchanged

In the hours following the Fed’s announcement, Bitcoin rose to around $96,400, showing a 1.6% increase over 24 hours, according to CoinMarketCap data at 8:30 AM ET (12:30 GMT). The world’s largest cryptocurrency had briefly touched nearly $97,500 earlier in the day but remains below the $100,000 level it last held in late February.

The crypto markets, often known for their sensitivity to monetary policy shifts, appear to be responding to the Fed’s balanced tone and decision to pause further rate hikes for now.