Equities, crypto markets and precious metals performed well during the morning trading session on Wednesday, just before the US central bank concluded its Federal Open Market Committee (FOMC) meeting. While the Fed said in a statement that the benchmark interest rate would rise soon, central bank chief Jerome Powell said the committee was “ready to raise the federal funds rate at its March meeting.” Powell’s statements after the meeting, as well as discussions about slashing the balance sheet, were seen as a drop in value by investors and global markets.
FOMC says it plans to raise federal funds rate ‘soon’, Fed Chair Jerome Powell insists rates will change in March
After a week of disappointing markets, the much-anticipated Federal Open Market Committee (FOMC) meeting was held, and committee members unanimously approved the decision to keep rates at near-zero levels.
“With inflation above 2 percent and a strong labor market, the committee expects it to be appropriate to raise the target range for the federal funds rate soon,” the FOMC said in a statement on Wednesday. While the financial institution’s statement highlighted “soon”, it meant the US central bank plans to leave the baseline interest rate range untouched, at least for now.
Fed Chairman Jerome Powell spoke after the meeting and told that the benchmark rate could increase in March. Powell also noted that it will take some time to bring down the Fed’s balance sheet.
“The balance sheet is way bigger than needed,” Powell told the press. “There is a substantial amount of shrinkage to be done in the balance sheet. This is going to take some time. We want this process to be systematic and predictable.” Since everyone was still attached to the FOMC’s “soon” statement, Powell insisted:
The committee considers raising the federal funds rate at its March meeting, believing that the conditions are appropriate for doing so.
Stocks, Crypto Markets, Precious Metals Lower After Fed Statement
When the stock market closed, the NYSE was down 103 points and the Dow Jones Industrial Average about 129 points. The Nasdaq index managed to stay above a few percent and the S&P 500 dropped a few percent.
One ounce of .999 fine gold declined by 1.77% and that of one ounce of .999 fine silver declined by 2.48%. Of course, the gold bug and the economizer Peter Schiff Throw in my two cents about the Fed meeting and Powell’s statements.
“Powell said the Fed will begin reducing its balance sheet at an appropriate time,” Schiff tweeted, “He then said that he doesn’t really know when that might happen because the FOMC hasn’t even discussed it yet. Really? When they meet, what exactly do they talk about in the game? We’re screwed and they know it.” some people trolled Schiff because the price of gold slipped after Powell’s statements.
The global crypto market capitalization was also not very good, as it fell by more than 2% to 1.71 trillion. The major crypto asset bitcoin (BTC) was quite volatile and within two five-minute candles before the Fed statement was published, BTC jumped from $37,400 to $38,946 on Bitstamp.
Metrics showed that the 24-hour price range for Bitcoin (BTC) was between $35,300 and $39,310 per unit during the day. Several other top ten crypto assets lost between 2% and 7% in the few hours following Powell’s statement.
What do you think of the FOMC meeting and Jerome Powell’s statements? What do you think about the market reaction after that? Let us know what you think about this topic in the comment section below.
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