Bitcoin Drops As Federal Reserve Announces No Rate Cuts In June

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The Federal Reserve announced on Wednesday that it would not change its policy interest rate despite increasing political pressure to change course.

No Rate Cuts Yet, Says Federal Reserve

In a press release, the Federal Reserve declared that job growth and economic expansion have “remained strong” while inflation has only seen “modest progress” towards its 2% target.

“The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals,” the statement read.



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This comes after the U.S. Bureau of Labor Statistics (BLS) released its latest inflation CPI inflation figures, showing 3.3% annualized inflation in May.

That’s slightly above the 3.4% inflation reading in April, and a notch above what economists were expecting, according to Reuters.

“Indexes which increased in May include shelter, medical care, used cars and trucks, and education,” wrote the BLS on Wednesday. Among other things, costs for new vehicles, communication, and recreation dropped over the month.

A lower inflation reading was a signal to markets that the Federal Reserve is getting closer to its 2% inflation target, and thus could be more willing to lower its policy interest rate back down to standard levels.



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That’s bullish for both stocks and crypto, which have historically performed well when it’s cheap for investors to borrow money.

Bitcoin’s Price Reaction

Bitcoin surged 3% on Wednesday morning following the May CPI print but dropped slightly after the Fed’s largely expected no-cuts announcement.



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While the central bank said after its last meeting that it “does not expect it will be appropriate to reduce the target range” anytime soon, certain developments in June gave reason to believe the Fed might hesitate.

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