The Federal Reserve didn't raise interest rates this time—don't think it's all calm, a bigger storm might be brewing!
Let's first discuss the background. The U.S. Federal Reserve, or the Fed, decided to keep interest rates in the range of 4.25% - 4.5% at its recent policy meeting. But don’t relax just because they didn't raise rates; this is not a signal that the Fed is ready to 'ease'. The current economic situation is just like before a storm, with various data being uncertain. The Fed's decision not to raise rates is merely a tactical retreat amidst this chaotic environment.
Next, I need to remind cryptocurrency investors of three points.
First, although the Fed did not raise rates, it doesn't mean it is easing monetary policy. By shrinking its balance sheet and pulling money out of the market, this is actually a form of 'invisible tightening'. The amount of money in the market is still decreasing, and funds will not immediately flow into the cryptocurrency market, so don’t expect a significant surge in cryptocurrencies right away.
Second, the current economic outlook is shrouded in thick fog, and nothing is clear. The issue of high inflation has not been resolved, and prices remain elevated. Although the labor market seems strong, signs of fatigue are already appearing. The Fed itself has stated that the risks of inflation and unemployment are both increasing. This suggests that the likelihood of an economic shock has greatly increased, which will certainly affect the cryptocurrency market as well.
Third, no one can predict the Fed's next move. It has clearly stated that all future policy decisions will depend on new economic data. If the CPI (Consumer Price Index) rises again, the Fed may significantly raise rates; if the labor market worsens, the Fed might change its strategy. In this case, the market will fluctuate significantly based on the upcoming economic data, and the cryptocurrency market will likely not be able to stay unaffected.
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