The US economy appears to be poised for a paradigm shift with the next Federal Open Market Committee (FOMC) meeting looming on the country's economic horizon. With current federal interest rates expected to remain unchanged, a whirlpool of speculation appears to be generating Fed officials' forecasts for 2024. With the meeting set to begin in 11 days, the country's financial landscape, including the world of cryptocurrencies, is embracing itself. For potential impact. At the same time, with inflation rates declining compared to last year, the US economy appears to be gradually booming.
Interest rates likely to remain unchanged: detailed report
With a strong labor market and moderate inflation, the Fed is expected to maintain its stance on current interest rates. The latest Consumer Price Index (CPI) data showed a significant decline in inflation rates since last year. However, compared to 3.14% last month, the current rate stands at 3.35%, which is contrary to market expectations. Moreover, the current inflation rate of 3.40 is still above the 2% range set by the Fed.
Meanwhile, Mary Daly, president and CEO of the Federal Reserve Bank of San Francisco, said the US economy is “in really good shape.” It drew contrasting lines of the country's current economic landscape with the previous year's performance.
In line with this, the Fed's funds target rates are also expected to remain unchanged after the next meeting. Although target interest rate odds for the Fed's January 31 meeting seem to indicate the possibility of interest rates remaining unchanged, a potential decline to 5.25 also appears to be on the horizon. It is worth noting that the probability of rates not changing also reflects the treed data, with the graphs displaying a 97.9% probability of not changing.
The possibility of prices not changing also seems to be a stage for a potential impact on the world of cryptocurrencies. Since interest rates are still about to remain unchanged, the current cryptocurrency market will continue to move forward. While if the rates decline marginally and reach 5.25, institutional and retail investors may look for investments in more volatile assets. After that, cryptocurrency prices are also expected to have a strong impact, pushing the crypto project within the country.
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Bitcoin ETFs are coming into play
With the recent approval of Bitcoin ETFs entering the arena, the country seems to be noticing a significant spike in trading activity as the trading volume of these ETFs continues to rise.
Interestingly, the potential decline may also help these financial products, as investors may want to invest more in such assets. Meanwhile, despite unchanged prices, ETFs appear to be positioning themselves as leaders in the trading space. This is also in line with the huge rise in inflows revolving around these ETFs.
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