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FOMC Interest Rate Decision Signals All Clear For Bitcoin Bull Run

The Bitcoin (BTC) uptrend faces smooth sailing ahead following the Federal Open Markets Committee (FOMC) interest rate verdict on Wednesday.

Despite February’s inflation numbers surpassing expectations last week at 3.2%, the Federal Reserve chose to maintain its target interest rate within the 5.25% to 5.50% range.

The FOMC Interest Rate Decision

In its press release on Wednesday, the central bank highlighted the ongoing expansion of the nation’s economic activity. Simultaneously, it acknowledged persistently low unemployment rates and stubbornly high inflation.

“The Committee assesses that the risks to achieving its employment and inflation objectives are becoming more balanced,” the statement noted. “The economic outlook remains uncertain, and the Committee continues to closely monitor inflationary pressures.”

The Federal Reserve remains steadfast in its commitment to maintaining a Consumer Price Index (CPI) inflation target of 2%—a level not observed since February 2021. Some economists, such as Paul Krugman, have proposed that the Fed consider adjusting its target inflation rate to 3% and declare victory in its battle against escalating prices.

Although the Fed has hinted at the possibility of future rate hikes, it did not explicitly mention any plans for rate increases in Wednesday’s statement.

The possibility of rate cuts remains remote for now.

“The Committee anticipates that it will not be appropriate to decrease the target range until it is more confident that inflation is steadily approaching 2 percent,” the statement emphasized.

Furthermore, the Federal Reserve intends to continue its reduction of treasuries and mortgage-backed securities from its balance sheet, which has diminished from its peak of $8.5 trillion in April 2022 to $7.5 trillion this month.

Aligned with projections made in December, the Fed foresees a reduction in interest rates to 4.6% by the close of 2024. Following the announcement, the market quickly priced in a 60% likelihood of the initial cut taking place in June.

Healthy Sign For Bitcoin Bull Run

Historically, Bitcoin’s price has demonstrated a robust correlation with equities, which are significantly impacted by the Federal Reserve’s interest rate decisions. Thus, an indication to maintain the current course—hinting at potential rate cuts this year—serves as a positive signal for the ongoing bull market.

Following last week’s discouraging inflation report, inflows to Bitcoin ETFs saw a decline, outflows from Grayscale increased, and BTC’s price experienced a drop from $73,000 to as low as $61,000 earlier this week.

However, mere hours after today’s meeting, Bitcoin has surged by over 9%, reaching $67,700.

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