Reserve

Wednesday

Bitcoin

With inflation statistics reflecting improvements, the Federal Reserve is expected to sanction its 11th interest rate increase since March 2022 on Wednesday. This move would take its benchmark borrowing rate to a range of 5.25% to 5.5%— the highest since January 2001. 
Crypto markets and investors alike are closely observing these developments, considering the potential influence on <a href="https://crypto.ro/en/bitcoin/" rel="noopener noreferrer nofollow">Bitcoin</a> and other cryptocurrencies. 
The decision would determine whether the <a href="http://What to expect from today’s FOMC meeting" rel="noopener noreferrer nofollow" target="_blank">Federal Open Market Committee (FOMC)</a> officials feel they have done enough in their battle against high inflation or if more adjustments are necessary. 
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 “The signal will probably be, yes, we’re hiking, but then we think we can sit here for a while and see,” speculated Kathy Jones, Chief Fixed Income Strategist at Charles Schwab. 
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Although the consensus among <a href="https://crypto.ro/en/dictionary/central-bank/" rel="noopener noreferrer nofollow">central bank</a> policymakers indicates that inflation rates remain uncomfortably high, any additional rate hikes carry considerable risks, particularly with the looming threat of a mild recession. 
Jones is among many financial observers who believe the central bank has done enough already. With the <a href="https://crypto.ro/en/news/cryptocurrency-market-braces-for-a-volatile-week-ahead/" rel="noopener noreferrer nofollow">annual inflation rate</a> dropping to 3% in June, compared to 9.1% a year ago, there are growing concerns that further Fed actions might unnecessarily drive the economy into contraction. Jones argued, “The Fed should be done already. They’re walking a difficult line here.” 
However, contrary to this sentiment, the Fed seems poised to implement at least one more rate increase. A key focus in Wednesday’s meeting will be whether the Fed will maintain this trajectory or opt for a slower pace of hikes. 
Chairman Jerome Powell’s comments during the upcoming meeting will be crucial, as they could reveal the FOMC’s inclination to pause the rate hikes while studying the impact of previous increases. 
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 “The hike that’s going to happen Wednesday is unnecessary, and probably the last couple were unnecessary,” argued Luke Tilley, Chief Economist at Wilmington Trust Investment Advisors. 
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The Fed’s actions have been guided by a historical perspective, namely the costly lesson of backing off the inflation fight prematurely during the early 1980s. This cautious approach acknowledges that prematurely ceasing the inflation fight could lead to a rerun of the 1970s-early 1980s stagflation, while pushing too hard could plunge the country into a recession. 
How this intricate dance between inflation control and economic growth plays out could significantly influence the global economy. As for the crypto markets, these decisions and their knock-on effects could fuel volatility, further highlighting the importance of risk management.

Federal Reserve’s anticipated decision and potential impact on crypto markets

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