Federal Reserve Maintains Interest Rates Amidst Economic Outlook Adjustments
The Federal Reserve has held steady the fed funds rate while cutting growth forecasts and raising inflation predictions. Bitcoin experienced volatility post-announcement, declining to approximately $83,500. Market concerns over tariff threats and the Fed’s monetary outlook continue to pressure cryptocurrencies.
The U.S. Federal Reserve has maintained the benchmark fed funds rate between 4.25% and 4.50%, remaining unchanged for the second consecutive time. However, the Fed has revised its economic growth outlook downwards, with expectations for GDP growth in 2025 reduced to 1.7% from 2.1%. This adjustment is attributed to increased economic uncertainty, particularly surrounding tariff policies proposed by President Trump.
Moreover, the Fed has raised its inflation forecast, predicting core Personal Consumption Expenditures (PCE) inflation at 2.8% for this year, up from an earlier estimate of 2.5%. The projections for inflation in 2026 and 2027 remain at 2.2% and 2.0% respectively. Additionally, the Fed plans to slow its balance sheet runoff, also known as quantitative tightening, starting April 1.
Following the Fed’s announcement, Bitcoin (BTC) experienced significant volatility, subsequently declining to approximately $83,500 after hovering just above $84,000 prior to the news release. General market sentiment has been influenced by fears regarding tariff threats, alongside the Fed’s recent hawkish stances which have diminished hopes for more accommodating financial conditions in the near future, particularly affecting cryptocurrencies and equities.
Investors are keenly awaiting comments from Fed Chair Jerome Powell, scheduled for 2:30 p.m. Eastern Time (18:30 UTC), who is expected to provide further insights on the Fed’s monetary policy outlook.
In summary, the Federal Reserve’s decision to maintain interest rates comes amid lowered economic growth expectations and increased inflation forecasts. These changes have contributed to heightened volatility in financial markets, including a recent downturn in Bitcoin prices. The upcoming remarks by Fed Chair Jerome Powell may offer additional clarity regarding the Fed’s trajectory moving forward.
Original Source: www.coindesk.com
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