May 7 Fed Interest Rate Decision: What It Means for the Cryptocurrency Market

The next meeting of the Federal Reserve will be held on May 7, and I firmly believe: the likelihood of a rate hike or cut this time is almost zero. But that does not mean the market is calm, far from it.

Now all eyes are on what Jerome Powell will say at the press conference and how the economy will perform in June.

May: No expected changes

The prediction market Polymarket predicts a 98% chance that the Fed will not adjust interest rates at the May meeting. On the other hand, there is a 2% chance of a 25 basis point rate cut in May.

Inflation is slowly cooling down but still above the Fed's 2% target. Although interest rates have reached 5.25% to 5.50%, the highest level in over 20 years, the Fed still seems to be in a wait-and-see mode.

However, even though a “pause” in May is almost certain, the market is not only focused on the Fed's actions but is also closely monitoring the remarks of Fed Chairman Jerome Powell.

June: A turning point?

The situation in June will become murky, with a 72% chance that the Fed will not adjust interest rates at the June meeting. Further market expectations show a roughly 25% chance of a rate cut.

If job growth slows or inflation declines further, this possibility may increase.

This makes the upcoming inflation and employment reports crucial. A weak employment report or weak consumer price data could influence the inclination for a rate cut.

On the other hand, if inflation remains high, the Fed may stick to its current stance or even start discussing maintaining high rates for the long term.

Powell's tone is more important than ever

Interestingly, the market's reaction to remarks from Fed Chairman Jerome Powell may be greater than its reaction to Fed actions. If he is too hawkish and uses terms like “persistent inflation” or “inadequate progress,” the market could face a significant sell-off.

Tech stocks and interest rate-sensitive sectors may decline, bond yields could rise quickly, the dollar may strengthen, while assets like Bitcoin or gold may lose momentum.

#美联储FOMC会议 #美国众议院市场结构讨论草案 #币安LaunchpoolSXT #Strategy增持比特币 #比特币战略储备