The US economy appears to be gearing up for a paradigm shift as the upcoming Federal Open Market Committee (FOMC) meeting looms over the country's economic horizon. With current federal rates expected to remain the same, a whirlwind of speculation appears to be brewing over Fed officials' projections for 2024. With the meeting set to begin in 11 days, the country's financial outlook, including the cryptocurrency realm, embraces itself for potential impact. Meanwhile, with inflation rates cooling compared to last year, the US economy appears to be gradually prospering.
Interest rates likely to remain unchanged: a detailed report
With a robust labor market and moderate inflation, the Federal Reserve is expected to maintain its stance on current interest rates. The last Consumer Price Index (CPI) The data showed a significant decline in inflation rates from last year. However, compared to last month's 3.14% mark, the current rate stands at 3.35%, which is in contrast to market expectations. Additionally, the current inflation rate of 3.40 is still above the 2% range set by the Federal Reserve.
Meanwhile, Mary Daly, president and CEO of the Federal Reserve Bank of San Francisco, said the U.S. economy is โin a really good place.โ She drew contrasting lines between the country's current economic outlook and the previous year's performance.
Aligning with this, Federal Funds target rates They are also expected to remain unchanged after the next meeting. While the target rate prospects for the Fed's January 31 meeting seem to hint at the possibility of rates remaining unchanged, they also seem to point to a likely drop to 5.25. Notably, the likelihood of rates remaining unchanged also reflected the data mentioned above, with graphics showing a 97.9% chance of no changes.
The possibility of rates remaining unchanged also appears to be setting up a potential impact on the cryptocurrency space. Since interest rates remain unchanged, the current crypto market will continue to advance. Whereas, if rates fall marginally and reach 5.25, institutional investors and retail investors could look for investments in more volatile assets. Following this, cryptocurrency prices are also expected to have a reinforcing effect, boosting the crypto business within the country.
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Bitcoin ETFs come into play
With the recent approval of Bitcoin ETFs entering the scene, the country appears to be seeing a significant increase in trading activity as the trading volume of these ETFs continues to increase.
Interestingly, a possible decline could also help these financial products, as investors might want to invest more in such assets. Meanwhile, even though rates remain unchanged, ETFs appear to be positioning themselves as frontrunners across the trading space. This further aligns with the colossal increase seen in capital inflows orbiting these ETFs.
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The content presented may include the personal opinion of the author and is subject to market conditions. Do your market research before investing in cryptocurrencies. The author or publication assumes no responsibility for your personal financial loss.
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