On March 22, at 2:30 PM, the US Federal Reserve (Fed) announced a 0.25% increase in interest rates, as predicted by many analysts. However, the agency admitted that a banking crisis could cause them to halt the interest rate hike campaign earlier than planned.

As reported by AZCoin News, the decision on March 22 marked the 9th consecutive interest rate hike by the Fed to combat inflation in the country. The interest rate rose from 4.75% to 5%, the highest level since September 2007.

Following the Fed’s announcement of the 0.25% increase, the price of Bitcoin surged to a high of $28,866 before dropping over 7% to $26,601 after statements by Fed Chairman Powell. It is currently trading at $27,400. Bitcoin has benefited greatly from the current macroeconomic instability, rising up to 35% since mid-March and setting new highs for 2023.

BTC/USDT 1 hour-chart on Binance | Source: TradingView

The crypto market also recorded nearly $249 million in derivatives liquidation value in the hours before and after the Fed’s interest rate hike decision, with over half of it coming from Bitcoin, reaching $124 million. The rate of long orders being burned was 82%.

Source: Coinglass

After the FOMC meeting, officials revealed that the interest rate hike process may be closed soon. In the previous 8 hikes, the Fed always emphasized that “continuous interest rate hikes are reasonable.” According to the Wall Street Journal, this meeting’s minutes were without the phrase, indicating a significant change in the agency’s view on economic policies.

The statement said it was too early to determine whether the banking system’s tensions would restrain the economy. Fed Chairman Jerome Powell affirmed that the US banking system is still healthy and flexible.

“Recent events may tighten the credit conditions of households and businesses, as well as affect economic activity, employment, and inflation. But we cannot be certain about the extent of these impacts,” the Fed shared.

All 11 voters in the FOMC agreed with this decision. New predictions show that 17 of the 18 officials participating in the meeting expect the Federal Reserve interest rate to increase to at least 5.1% and maintain at that level until December. Quarterly forecasts were little changed from those released in December.

Powell said officials had considered keeping the current interest rate but then decided to raise it by 0.25% due to persistently high inflation and unstable economic activity. In the meeting, the Fed chairman announced that he would not cut interest rates this year. Powell stated that the Fed would continue to monitor inflation and other economic indicators to adjust interest rates accordingly.

#Fed #FederalReserve #BTC #Bitcoin #azcoinnews

This article was republished from azcoinnews.com

In the most recent week, #banks borrowed a total of $164.8 billion from two #FederalReserve backup facilities, a hint of heightened financial pressures in the wake of #SiliconValley Bank's bankruptcy.

According to data released by the Fed, banks borrowed a record-breaking $152.85 billion through the discount window, which serves as their traditional source of liquidity, in the week ending March 15. This is an increase from $4.58 billion the week before. The previous record-breaking amount was $111 billion, attained during the financial crisis in 2008.

The statistics also revealed $11.9 billion in borrowing under the Bank Term Financing Program, the Fed's brand-new emergency safety net that was introduced on Sunday.

In light of last week's failures of #SVB of California and #SignatureBank of New York, the credit provided through the two backstops as a whole reveals a banking sector that is still vulnerable and coping with deposit migration.

Additional credit extensions throughout the week totaled $142.8 billion, which includes loans made to bridge banks for SVB and Signature Bank by the Federal Deposit Insurance Corp.

On the other hand, according to EPFR Global statistics quoted by Bank of America Corp., money-market funds had inflows of $113 billion, the highest level since April 2020, while Treasuries saw inflows of $9.8 billion, the highest level since May 2022, in the week ending March 15.

The Federal Reserve’s balance sheet has recently grown by $94 billion in assets, which include collateralized securities and government bonds, in addition to the $297 billion increase that happened not long ago.

According to the Federal Reserve, this move was intended to address the liquidity issue experienced by commercial banks amid the recent financial crisis. However, it appears to be in contrast to the Fed’s tightening monetary policy.

@azcoinnews

This is a unique situation in the history of the Fed, as they find themselves between a rock and a hard place: QT (Quantitative Tightening) and QE (Quantitative Easing). Quantitative tightening involves decreasing the size of the balance sheet, while quantitative easing involves increasing the size of the balance sheet.

The decision to increase the balance sheet was a response to the liquidity crisis that commercial banks were experiencing, and the Fed’s move was intended to address this issue. However, this move seems to be in contrast to the Fed’s current monetary policy of tightening, which involves increasing interest rates and reducing the size of the balance sheet.

As a result, there may be more macroeconomic fluctuations in the future that are difficult to predict. This is a critical time for the financial markets, and investors must keep an eye on any changes that may occur.

Looking ahead, the question on many investors’ minds is whether the market will experience a “Sell in May and Go Away” scenario. This phenomenon refers to the historical trend of stocks performing poorly between May and October. With no FOMC meetings scheduled for April, this could be an opportunity for the crypto market, specifically Altcoins, to recover before moving into May.

Billionaire Jeffrey Gundlach Predicts Significant Rate Cut by Federal Reserve

The “Bond King” billionaire Jeffrey Gundlach has predicted that the Federal Reserve will soon make significant interest rate cuts. He said, “red warning signals for a recession,” as all yields on US Treasury bonds from the past two years “are much lower than the Fed’s fund rate.”

The CEO of Doubleline emphasized, “All USD yields from two years onwards are much lower than the fund’s lending rate.” The yield curve inversion occurs when short-term Treasury bond yields are higher than long-term bond yields.

Gundlach said the latest interest rate hike would be the Federal Reserve’s last. In February, the billionaire warned of the painful consequences of the next recession.

#Fed #FederalReserve #QT #azcoinnews #crypto2023

This article was republished from azcoinnews.com

Tesla CEO Elon Musk has called for the US Federal Reserve System (Fed) to cut interest rates by 50 basis points. Responding to a tweet from billionaire investor Bill Ackman, who suggested that the Fed should keep rates unchanged, Musk urged that the central bank should take action.

Musk’s call comes at a time when the banking industry is grappling with a series of crises, including the recent collapse of Silicon Valley Bank and Signature Bank, and the liquidation of Silvergate Bank. While Ackman has highlighted the challenging economic situation, he has also argued against raising interest rates, suggesting that doing so would be unlikely to help.

In the lead-up to the Fed’s March meeting, which ended on Wednesday, Ackman had called for a pause in the central bank’s rate hikes, indicating that inflation remained a concern. However, CME’s FedWatch tool indicated that the majority of interest rate traders expected a hike from the meeting.

Musk has been vocal in the past about the Fed’s interest rate policy, using his Twitter account and Tesla earnings calls to express his views.

While Musk’s call for lower rates may be welcomed by some, others may be concerned about the potential impact of such a move on the economy. The Fed’s decision on interest rates is closely watched by investors and can have a significant impact on financial markets.

The debate over interest rates highlights the ongoing challenges facing the US economy, as it seeks to recover from the COVID-19 pandemic. As the situation continues to evolve, it remains to be seen what steps the Fed will take to support the economy and how this will be received by the business community and investors.

#Fed #FederalReserve #ElonMusk #azcoinnews #azcoin

This article was republished from azcoinnews.com

Billionaire investor Bill Ackman, the CEO of Pershing Square, has taken to Twitter to urge the Federal Reserve to pause on raising interest rates at its upcoming meeting.

Ackman’s tweet is a response to recent events in the financial industry that have seen three US banks close in a week, wiping out equity and bond holders, and the demise of Credit Suisse and the zeroing of its junior bondholders.

In his tweet, Ackman notes that bondholders bearing losses is a new phenomenon as they were protected in the Global Financial Crisis. He also points out that the banking crisis remains unresolved and higher rates won’t help. Ackman suggests that the best course of action is a temporary FDIC deposit guarantee until an updated insurance regime is introduced.

The billionaire investor believes that the recent events have had a meaningful tightening of financial conditions that has not yet been visible, and the effect of this is not yet fully known. He suggests that the Fed should make it very clear that this is a temporary pause so that the impact of recent events can be assessed. Ackman further suggests that Powell, the head of the Fed, should make clear that his intent is to resume raising rates at the next meeting unless the banking crisis remains unresolved and has on its own sufficiently slowed the economy.

Ackman’s tweet highlights the importance of financial stability, which is the Fed’s first responsibility. The billionaire investor argues that this is not an environment into which the Federal Reserve should be raising rates and adding additional pressure on the system. Ackman’s tweet suggests that the Fed needs to be mindful of the current situation and take appropriate action to ensure financial stability.

#Fed #FederalReserve #Billackman #azcoinnews #crypto2023

This article was republished from azcoinnews.com

The recent fall of Silicon Valley Bank #svb has raised concerns about the future of US interest rates. Many are wondering if this decline will lead to a drop in rates to 3.75%. 

However, it is important to note that the relationship between Silicon Valley Bank's performance and interest rates is not straightforward. While a decline in the bank's stock price may indicate a weaker economy, it does not necessarily mean that interest rates will drop. 

Furthermore, the #FederalReserve has already indicated that it plans to keep interest rates steady for the time being. This decision is based on a variety of factors, including inflation, employment rates, and global economic conditions. 

In short, while the fall of Silicon Valley Bank is certainly noteworthy, it is not necessarily an indicator of impending interest rate changes. It is important to stay informed about economic trends and to consult with financial experts before making any major #investment decisions.

Traders are predicting that the Federal Reserve System (Fed) is more likely to raise the base rate by 25 basis points at its March monetary policy meeting rather than freeze it.

This news comes after concerns over small and medium-sized banks in the US spread, leading to the possibility of a rate freeze. However, recent developments such as the expansion of liquidity supply by major central banks like the Fed, support by major US banks for First Republic Bank, and the US Treasury’s policy to provide additional support to banks if necessary have alleviated market concerns.

According to the CME FedWatch Program, the probability that the Fed will freeze the base rate, which currently stands between 450bp and 475bp, at the FOMC meeting on the 21st and 22nd is 19.5%. This is a decrease from 26.2% the previous day and 30.6% a week ago. Conversely, the probability that the Fed will raise the base rate by 25 basis points from 475 basis points to 500 basis points is 80.5%, up about 10% points from 73.8% the day before.

Some strategists suggest that the Fed’s interest rate freeze could pose even greater risks, citing instability in the financial system. As such, a small rate hike may be the best option for stabilizing the market. However, it remains to be seen what action the Fed will take at its upcoming meeting.

The possibility of a rate hike indicates that the Fed is optimistic about the US economy’s prospects, especially given the country’s continued recovery from the COVID-19 pandemic. The decision will have significant implications for both domestic and international markets, and investors will be keeping a close eye on any developments.

#Fed #FederalReserve #Federal #BTC #azcoinnews

This article was republished from azcoinnews.com