On the evening of March 20, Beijing time, the big shots at the Federal Reserve finished their meeting and decided to keep the benchmark interest rate firmly in the range of 4.25%-4.5%. As soon as this news broke, the entire cryptocurrency circle shook—after all, 'When Old Powell speaks, the crypto market trembles' is not said lightly.
The key point is here! Their dot plot shows that they expect to cut interest rates twice by 2025, which is completely consistent with last December's plan. The most explosive news is that the Federal Reserve announced it will start to 'slow down the balance sheet reduction' from April 1. So-called balance sheet reduction means the central bank reduces its holdings of government bonds and other assets, and if this action slows down, theoretically it will inject some money into the market.
【The market starts to bet on clarity in June】
According to the latest statistics from data companies, traders now believe that the probability of the Federal Reserve announcing an interest rate cut at the June meeting has risen to 62.1%, up from only 57% before this meeting. This indicates that the market's expectations for a policy shift are heating up.
【Powell's speech hides secrets】
When asked about the economic situation, Federal Reserve Chairman Powell made several key points:
1️⃣ 'The U.S. economy is quite strong right now!'
2️⃣ The slow balance sheet reduction is just a 'technical operation' and does not affect long-term strategy at all.
3️⃣ Although consumer spending has slowed down, he said this is because it previously increased too quickly, and now a correction is very normal.
4️⃣ The labor market is as solid as a rock, and he is very satisfied with the unemployment rate data.
【First mention of tariff impact】
What surprised the market the most was that Powell took the initiative to talk about the tariff policy during Trump's era: 'To be honest, tariffs have a significant impact on inflation, which accounts for a large proportion.' However, when reporters pressed for specific data, he became evasive, saying that more time is needed for assessment. Analysts pointed out that this is actually Powell deliberately avoiding a clear evaluation of Trump's policies, instead emphasizing the need to 'keep a close eye on monthly data.'
【Market reaction】
As soon as the speech ended, the U.S. dollar index fell by 0.5%, and gold prices surged by 3%. Bitcoin broke through the $87,000 mark within 24 hours, indicating that traders have interpreted Powell's speech as a 'countdown to interest rate cuts.' However, some seasoned traders reminded: don't rush to go all in, as the Federal Reserve's real actions will still depend on the inflation and employment data in the next two months.
