Federal Reserve Forecasts a More Dovish 2024: Crypto Impact Explored

• U.S. Federal Reserve Holds Interest Rates Steady but Lowers Year-End Outlook
• Fed Releases Quarterly Update of Economic Projections
• Fed Anticipates Hoisting Fed Funds Rate to 4.6% by End of 2024
• Effect on Bitcoin and Traditional Markets
• Upcoming Press Conference with Fed Chair Jerome Powell

U.S. Federal Reserve Holds Interest Rates Steady but Lowers Year-End Outlook

The U.S. Federal Reserve stayed the course on Wednesday by holding its benchmark fed funds rate range steady at 5.25%-5.50%. Simultaneously, the central bank lowered its year-end 2024 rate outlook to 4.6% from 5.1%, reflecting tighter financial and credit conditions for households and businesses. The central bank noted, These conditions will likely impact economic activity, hiring, and inflation, although the extent of these effects remains uncertain.

Fed Releases Quarterly Update of Economic Projections

Along with the interest rate announcement, the Federal Reserve also released its updated quarterly economic projections. The central bank's new forecast anticipates 2023 concluding with a core inflation rate of 3.2%, a drop from the 3.7% expectation held three months earlier. The projected end rate for 2024 is now 2.4%, down from the previously anticipated 2.6%. Interestingly, predictions for real GDP growth for 2024 have also been marginally reduced to 1.4% from 1.5%.

Fed Anticipates Hoisting Fed Funds Rate to 4.6% by End of 2024

The Federal Reserve's current expectations place the fed funds rate at 4.6% by the conclusion of 2024, a transition from the 5.1% expectation held three months earlier. This shift suggests potential for 75 basis points of rate cuts in the coming year.

Effect on Bitcoin and Traditional Markets

Upcoming Press Conference with Fed Chair Jerome Powell

Federal Reserve Chair Jerome Powell is scheduled to conduct a post-meeting press conference at 2:30 pm ET, where market observers will be keen to glean further insights about the future trajectory of monetary policy. Before today, markets did not anticipate any significant moves at the Fed's late January meeting. However, as per the CME FedWatch tool, almost 50% now expect a rate cut at the following meeting in March.

Edited by Jonathan Stoker