So, fasten your seatbelts, crypto enthusiasts and sympathizers! Today was the day X, when the American Federal Reserve, the main conductors of the global financial symphony, delivered their verdict on the key interest rate. And you know what? They said: 'Not today.' The rate remained firmly at 4.25%-4.50%.
Let’s be honest, this was not the plot twist that would have knocked everyone out of their seats. The markets mostly expected it. There was a slight intrigue, like before a lottery result announcement where you bought only one ticket – the chances are slim, but what if? But the miracle didn’t happen. Ironically, the stock markets in the U.S. even perked up today before this 'non-event.' Indices like the Dow Jones or S&P 500 went up. Why such positivity if seemingly nothing has changed?
I think several things came into play here. First, the absence of bad surprises is already good news. Second, a ray of hope appeared in the dark realm of trade wars: negotiations between the U.S. and China were announced for the weekend, and it seems the goal is not to create a new mess, but rather to 'untangle' the situation a bit. For the markets, this is like a breath of fresh air. And of course, there were some corporate stories – Disney surprised with subscribers (who would have thought!), AMD shot up with chips, in general, local victories also added to the mood.
The Fed itself seems to feel like a tightrope walker walking over an abyss. On one hand, the economic data is quite contradictory. One report says: 'It seems we are slowing down, slow down!', hinting at the effect of tariffs. Another screams: 'No way, jobs are being created faster than hot pies!' And inflation, that troublesome lady, although she has calmed down, is still lurking nearby, and there is no guarantee she won’t return with a vengeance. So the Fed decided: it’s better to stand still, look around than to make a sharp move and fall. Such a 'tactical pause'.
At the same time, there is a funny dissonance: markets have long been buzzing about a soon and preferably multiple rate cut this year. Their expectations can be said to be more 'dovish' (this is a term when the Central Bank is inclined towards soft policy, like a dove of peace) than what the Fed itself showed in its forecasts a couple of months ago. This difference in sentiment is a field for future volatility.
And here comes the main character of tonight – Fed Chairman Jerome Powell. His press conference at 2:30 PM ET is not just a formality; it’s a simultaneous guessing game of 'Guess the Melody' for all market participants. Everyone will be listening intently to his words, trying to understand: what worries him more – the slowdown or inflation? How much do tariffs spoil the picture? And the most pressing question hanging in the air: when the hell will you finally start cutting rates?!
Essentially, today’s decision is an appetizer before the main course. The true 'taste' of the situation, signals about the future, and potential market movements (yes, including crypto!) depend on how Powell presents the current picture and what hints he gives about further steps. So, let’s prepare the popcorn, tune in to the broadcast, and listen carefully to the Head of Money! It will be interesting.