The United States Federal Reserve is unlikely to reduce interest rates following the FOMC meeting on May 7, as it reinitiates an unconventional bond purchasing program.

In anticipation of the #FOMCMeeting on May 6, the market is evaluating the implications of this recent decision to resume bond purchases.

In recent weeks, Fed Chairman Jerome Powell has resisted calls to lower interest rates, despite widespread belief that such a move could stimulate the market.

Nevertheless, the central bank's resumption of bond purchases has intensified speculation regarding the potential effects of this action on the overall financial market.

FOMC Meeting and the Bond Purchase Twist

The United States Federal Reserve has commenced its largest three-year bond acquisition since 2021, as reported by Money Guru Digital on X.


The institution has been injecting $20 billion daily, as evidenced by the results of the Treasury auction.

Anticipations for interest rate reductions are set for the upcoming FOMC meeting on May 7.

This liquidity infusion signifies a substantial move by the Fed, indicating its response to persistent financial pressures.

Such a level of capital injection was previously observed during the COVID-19 pandemic, serving as a comparative measure for market stabilization.

In light of the ongoing trade tensions between the U.S. and China, along with evolving market conditions, Fed Chair Jerome Powell is adopting a more cautious stance.

Although the approach to market stabilization is measured, the forthcoming policy update from tomorrow's meeting has the potential to alter market trends.

Interest Rates Difference: Jerome Powell and President Trump in Spotlight

Jerome Powell and President Donald Trump have distinctly opposing perspectives on economic management outside the FOMC meeting.

President $TRUMP has called on the Federal Reserve to reduce interest rates prior to Wednesday's meeting.

The argument is based on the premise that inflation is manageable, currently at 2.39%, a decrease from 2.82% in March.

Despite the ongoing tariff conflict, this inflation rate is approaching the Federal Reserve's annual target of 2%.

The Federal Reserve's stance remains uncertain, but engaging in bond purchases may offer temporary relief to the overall financial market.

Key Implications for Bitcoin and Risk Assets

Historically, risk-on assets such as Bitcoin tend to respond to decisions made during FOMC meetings.

A reduction in interest rates will enhance the appeal of crypto assets for investors. Following significant volatility earlier in the trading session, Bitcoin has regained the $95,000 threshold, experiencing a 1.3% increase.

Altcoins are also reacting to the anticipated interest rate announcement tomorrow, with Ethereum, XRP, and Solana reducing their daily losses.

According to a previous analysis of Bitcoin's price, there exists a potential for a breakout towards $100,000.

Regardless of the Federal Reserve's decision on Wednesday, this movement may occur if the Fed persists in providing liquidity to the market.

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