Why Do Markets Care About the Fed’s Decision?

The Fed’s interest rates are a key indicator for markets. When rates decrease, cash flow in the economy rises, which can lead investors to shift toward riskier assets. However, there is also a chance that the Fed may choose not to make any changes. Futures market data indicates a 1% likelihood of a 50 basis point cut, while a 25 basis point cut is expected with a 99% likelihood. In this case, the probability of no change in rates remains very low.

Political pressures on the Fed’s interest rate decision are a current topic. Former U.S. President Trump had pushed for rate cuts, reportedly telling Powell to “cut rates and wait.” These demands may have cast doubt on the Fed’s independence. However, Powell consistently emphasizes that they are an independent institution.

Powell’s Statements Eagerly Awaited

In today’s meeting, Powell’s statements will be as important as the Fed’s decision. While Powell may avoid commenting on the U.S. election results, he may give signals regarding interest rate policy. Powell consistently emphasizes the Fed’s independence from the government, a stance that strengthens his credibility.

This decision and the accompanying statements will be key in determining the short-term direction of the markets.

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Fed fell silent before the interesting announcement on December 14, focusing on Powell’s speech at Spelman College on Saturday. Powell’s words were of a nature to eliminate uncertainties about economic policies. Here are some notable statements from Powell’s speech:

• The Fed is ready to tighten more if necessary.
• It’s too early for policy relaxation, there is no room for speculation.
• FOMC is exhibiting a careful approach as risks are balanced.
• Significant progress has been made in the fight against inflation.
• An interest rate hike option is open to reduce inflation.
• It’s too early to say whether the monetary policy is restrictive.
• Core inflation is high, it needs to be reduced.
• The Fed has maintained its credibility in fighting inflation.
• US fiscal policy is unsustainable in the long term.
• The policy rate is in the restrictive zone.
• Economic uncertainty is “unusually high.”

Among the points, Powell emphasized are key issues such as inflation, interest rate policy, and economic uncertainty. These words provide an important guide to understanding the Fed’s policy approach and economic forecasts.

Recent economic data show that economic momentum slowed in the fourth quarter, the labor market cooled, and inflation slowed. This situation has created a disagreement among markets and Fed officials on economic forecasts.

According to the CME FedWatch Tool, the probability of the interest rate being kept constant as a result of the meeting was measured as 96.1%. However, Powell’s speech and the subsequent roundtable meeting will be decisive in how this rate will shape up. This uncertainty in the economic outlook between investors and policymakers is closely followed in financial markets.

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In recent days, when we examine the Bitcoin graph, we see that the price is stuck in a narrow range between $26,000 and $26,850. If there is an upward break, Bitcoin could show new movements between $26,850 and $28,100. However, if there is a downward break, Bitcoin may fluctuate between $26,000 and $24,900.

Important Updates Today:
– Gross Domestic Product (GDP) will be announced at 15:30. (Expectation %2,20 – Previous %2,00)
– Fed Chairman Powell will speak at 23:00.

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Latest Status in Cryptocurrencies – September 28

Bitcoin (BTC) The BTC/USD pair is currently trading at $26,420, up 0.20% at the time of writing. For BTC, resistance levels are $26,800 – $28,200, while support levels are $25,400 – $25,000.

Ethereum (ETH) The ETH/USDT pair is currently trading at $1,618, up 1.28% at the time of writing. For ETH, resistance levels are $1,694 – $1,731, while support levels are $1,550 – $1,465.

Binance Coin (BNB) The BNB/USD pair is currently trading at $213, up 0.47% at the time of writing. For BNB, resistance levels are $215.5 – $220.1, while support levels are $208.2 – $204.2.

Ocean (OCEAN) The OCEAN/USD pair is currently trading at $0.316, up 1.00% at the time of writing. For OCEAN, resistance levels are $0.33 – $0.338, while support levels are $22.8 – $15.4.

Origin Protocol (OGN) The OGN/USD pair is currently trading at $0.091, up 2.58% at the time of writing. For OGN, resistance levels are $0.10 – $0.12, while support levels are $0.084 – $0.071.

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