The Fed gave a dove, and Bitcoin surged overnight

The March FOMC meeting ended in the early morning of March 21, Taipei time, with the interest rate decision maintaining an interest rate range of 5.25% ~ 5.5%, in line with market expectations. However, Federal Reserve Chairman Jerome Powell released a dovish signal, causing U.S. stocks and assets such as Bitcoin to surge on the news. Bitcoin began to rise at 1 a.m. in Taipei, rising 8% overnight and fluctuating at 67,000 points at the time of writing.

🔥Federal Reserve meeting highlights:

1) Maintain the pace of three interest rate cuts throughout the year:

The interest rate dot plot released at this meeting shows that there will be three interest rate cuts in 2024, the number of interest rate cuts in 2025 will be reduced from four to three, and the median interest rate forecast will increase from 3.6% to 3.9%. Officials also expect three more rate cuts in 2026 and two more after that. Although the median expectation for 2025 has increased, the decision to maintain three interest rate cuts this year has stabilized the market's recent concerns about a rebound in inflation caused by hot economic data. It also shows that the Federal Reserve believes that the downward trend in inflation will continue.

2) Increase inflation and economic growth expectations

Compared with the Summary of Economic Projections (SEP) released in December last year, the Federal Reserve adjusted its U.S. GDP forecast for this year and next from 1.4% to 2.1%; the unemployment rate this year was slightly lowered from 4.1% to 4%; personal consumption expenditures (PCE) forecast remains unchanged at 2.4%, but core PCE is revised up from 2.4% to 2.6%. It shows that the U.S. economic performance is still strong.

3) The pace of bond reduction is expected to slow down:

Regarding the US$7.5 trillion balance sheet, although the Federal Reserve will continue to reduce its holdings of government bonds, agency debt and mortgage-backed securities as previously planned, Ball also said that it is appropriate to moderately slow down the pace of balance sheet reduction and adjust The pace of balance sheet reduction is not far off. Ball said that the basis for slowing down the balance sheet reduction is to avoid turbulence in the U.S. bond market and reduce pressure on the money market. The central bank does not want the problem of reserve shortages to recur. The slowdown in the balance sheet reduction means that the Fed will withdraw money from the market more slowly, which can be regarded as a disguised monetary easing policy.

Overall, the market generally interpreted this FOMC meeting as a more dovish stance, which also caused Bitcoin to rise sharply this morning. As U.S. stocks and cryptocurrency assets become more and more interconnected, major economic events such as the Federal Reserve’s interest rate decisions will also affect the price trend of the currency circle. We will also regularly update and interpret important events for you in the future. General manager information, follow Brother Nao to get the latest information!