Economic Outlook and Inflation Expectations

The FOMC noted that economic activity continues to expand at a moderate pace. Although employment growth has slowed, the unemployment rate remained low through September. Inflation has risen this year and remains somewhat elevated. The Committee reaffirmed its commitment to maximum employment and a long-term 2% inflation target.

Fed policymakers project core PCE inflation at 2.5% and overall PCE at 2.4% by the end of 2026, down from previous forecasts of 2.6% in both categories. Unemployment is projected at 4.5% for 2025 and 4.4% for 2026. According to the median projection, interest rates are expected to reach 3.1% by the end of 2028.

Securities and Reserves

The FOMC decided to end the reduction of total securities holdings as of December 1. Reserve balances are assessed to be ample, and the Fed indicated it may begin purchasing shorter-term Treasury securities if needed to maintain sufficient reserves. The Committee will continue monitoring incoming data to evaluate the appropriate stance of monetary policy.

Voting Results

The policy decision passed with a 9-3 vote. Schmid and Goolsbee voted to keep rates unchanged, while Miran favored a half-point rate cut. Additionally, four Fed officials forecast an additional two-quarter-point rate cut for 2026.

Bitcoin and U.S. Stock Market Reaction

Following the decision, Bitcoin briefly fell below $92,000 but quickly recovered above $93,000. U.S. stock indices moved higher, with the Dow Jones up 0.62%, S&P 500 up 0.26%, and Nasdaq up 0.03%. Investors are closely watching the Fed’s rate cut and Treasury purchases.

• The Fed will purchase $40 billion in Treasury securities over the next 30 days

• Treasury purchases will begin on December 12

• Policy decision passed with a 9-3 vote

• Schmid and Goolsbee voted to keep rates unchanged

• Miran supported a half-point rate cut

• Four Fed officials forecast two quarter-point rate cuts in 2026

• Reduction of securities holdings ended on December 1

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In global markets, Bitcoin and gold prices are climbing due to investors’ expectations surrounding the Fed’s interest rate decision. Gold rose 0.7% on Tuesday, reaching $3,357, while Bitcoin trades around $97,500. Conflicts in the Middle East, Trump-era trade tariffs, and energy price fluctuations are driving this trend. Experts predict the rally may continue. However, market uncertainty keeps investors cautious. 

How Will the Fed Decision Shape Markets?

The Fed plans to maintain interest rates at the 4.25%-4.50% range. Still, Jerome Powell’s statements will be pivotal for markets. Analysts say if Powell signals a June rate cut, Bitcoin could surpass $100,000. In contrast, a hawkish stance might trigger price declines. Investors are closely monitoring Powell’s speech. 

“This meeting is going to be strange. The Fed has no estimate to communicate about the next few meetings. The Fed needs to wait for two things: to see the policy actually go into effect. But then, when it does, it has to see how inflation expectations react. So the Fed needs to delay and then slow down.”

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Global Tensions Bolster Safe-Haven Demand

Conflicts in the Middle East and global trade wars are pushing investors toward Bitcoin and gold. BitMEX founder Arthur Hayes argues that rising energy prices will boost Bitcoin demand. Additionally, gold remains a reliable asset during inflation and economic uncertainty. As a result, cautious optimism prevails in markets. Investors are diversifying portfolios to mitigate risks. 

Bitcoin and gold prices continue to rise amid the Fed’s interest rate decision and global uncertainties. Investors are focused on Powell’s upcoming statements. While technical indicators signal weaknesses in the crypto market, on-chain metrics and declining exchange reserves suggest a potential supply squeeze. 

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Is Inflation on Target or Still a Concern?

Powell emphasized that long-term inflation expectations remain in line with the 2% target, but he did not express clear optimism for the short-term outlook. Highlighting the impact of tariffs on inflation, Powell stated, “We need a few more months to assess the effects of tariff inflation,” signaling that uncertainty will persist through the summer.

In summary: The Fed is not rushing to cut rates until it sees a “sustained decline” in inflation. This suggests that the market’s expectation of a “soft pivot” may be delayed.

New Scenario for 2025: Growth Expectations Down, Inflation Up

The Fed sharply revised down its 2025 growth forecast while raising inflation expectations. This shift indicates increasing uncertainty in the markets. Powell’s statement that “Policy is not on a pre-set course” shows that the Fed remains flexible and data-dependent.

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What does this mean? If the U.S. economy remains strong, interest rates may stay high for longer. However, if the labor market weakens, the Fed will likely take action accordingly.

Bitcoin and Ethereum Rally!

Following the Fed’s decision, Bitcoin quickly rebounded from $84,000 and surged past $85,000, gaining 1.22%. This indicates that investors are shifting toward risk-hedging assets like cryptocurrencies.

Ethereum, meanwhile, rose from $2,017 to $2,067, marking a 2.22% increase. Analysts note that the Fed’s decision to hold rates steady and Powell’s uncertainty-driven rhetoric are supporting short-term upside momentum in digital assets.

How Does the Fed’s Wait-and-See Approach Impact Markets?

Powell’s remark that “The economy is strong, but uncertainty is unusually high” clearly illustrates that markets have yet to find a clear direction. This could result in:

• Capital outflows from emerging markets as investors seek safer assets.
• Reduced foreign investor interest in Borsa İstanbul, negatively impacting liquidity.
• Higher short-term opportunities in the crypto market, but also increased volatility in the mid-term.

Key Insights and Market Commentary

• According to WSJ, the Fed cut its 2025 growth forecast while raising inflation expectations, potentially accelerating the “risk-off” sentiment in global markets.
• Powell pointed out that the labor market remains strong and is not a source of inflationary pressure. However, consumer spending is showing signs of slowing, which could influence future monetary policy decisions.
• The FOMC removed the phrase “Risks to inflation and employment are balanced” from its statement, signaling a more cautious Fed stance on economic risks.

The Fed’s decision to hold rates was widely expected, but the revised forecasts and Powell’s comments have shifted markets into a more cautious mode. Powell frequently used the word “uncertainty,” urging investors to stay alert.

Bitcoin and Ethereum are gaining traction as alternative assets amid uncertainty. However, until the Fed’s policy becomes clearer, market volatility is likely to continue.

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Expectations Met, Markets React

With recent inflation data, labor market trends, and global economic conditions, speculation had been swirling about what FED would decide in this meeting. However, markets had largely priced in this outcome. The previous interest rate was 4.50%, the expectation was 4.50%, and the announced rate remained at 4.50%.

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Following the decision, Bitcoin BTC, Ethereum ETH, gold, and the U.S. dollar experienced immediate fluctuations. Investors are now focused on the upcoming statement from the FED Chairman, which could provide further clues about future monetary policy moves. Will interest rates remain unchanged in the coming months, or is a shift on the horizon?

FED’s Message: Cautious and Calculated Steps

For some time, FED has been navigating the delicate balance between curbing high inflation and maintaining economic stability. Keeping interest rates unchanged signals a balanced and cautious approach to growth and employment. However, analysts suggest that FED might adjust its policy later in the year, depending on inflation trends and economic data.

This key decision on U.S. monetary policy doesn’t just impact the American economy—it directly influences global financial markets. Already, stock markets across Europe and Asia have started reacting to the FED’s interest rate stance.

In the coming days, statements from FED officials and upcoming economic indicators will be crucial in shaping market direction.

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On January 22, Wednesday, two major token unlocks are scheduled. SPACE ID (ID) will unlock 18.49 million tokens, equating to 0.92% of the total supply and valued at around $7 million. Similarly, Enalith (ENA) will unlock 12.86 million tokens, equivalent to 0.08% of the total supply, worth approximately $11 million.

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On January 23, Thursday, the Central Bank of Turkey will announce its interest rate decision at 4:30 PM. The expected rate is 45%, down from the previous 47.5%. Additionally, it is the final decision day for the Grayscale SOL ETF application. At the same time, U.S. Jobless Claims data will be released, with an expected figure of 220K, compared to the previous 217K.

Finally, on January 24, Friday, the Arbitrum (ARB) BOLD voting will conclude. The same day marks the final decision deadline for the Solana ETF applications by VanEck, 21Shares, Canary, and Bitwise.

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Key Figures

1. Core CPI (excluding food and energy): Monthly increase of 0.3% (forecast: 0.3%, previous: 0.3%).
2. Headline CPI: Monthly rise of 0.3%, with a yearly increase of 2.7% (forecast: 2.7%, previous: 2.6%).

The results indicate that inflationary pressures remain subdued, particularly in non-energy and non-food categories. The slight uptick in annual inflation suggests stability but signals that inflation has not yet fully returned to the Federal Reserve’s 2% target.

Federal Reserve’s Policy Outlook

These figures reinforce expectations that the Federal Reserve will keep interest rates unchanged at its December meeting. However, the annual inflation rate hovering at 2.7% may delay the possibility of rate cuts. Fed Chair Jerome Powell has reiterated that achieving the 2% inflation target is a prerequisite before considering easing monetary policy.

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Markets responded moderately to the data, with no major swings in volatility.

• The U.S. Dollar Index (DXY) held steady, reflecting the neutral sentiment.
• Stock markets saw a slight boost, fueled by optimism that the Fed may pause its rate hikes.
• Treasury yields saw minimal movement, with longer-term yields pulling back slightly, signaling caution among fixed-income investors.

Economic Implications

The alignment of inflation data with forecasts suggests a steady economic environment, which may enhance global risk appetite. As the Federal Reserve plays a pivotal role in global monetary trends, the stable U.S. inflation trajectory could positively impact European and Asian markets by reducing uncertainty.

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Cryptocurrency Market: Major Unlocks and Key Announcements

• $FLOKI token will make a major marketing announcement on Monday. This could impact the token’s market activity and attract investor attention.
• $AVAX will release 1.67 million tokens (valued at around $53 million) on Monday. This unlock represents 0.23% of AVAX’s total supply and may lead to price fluctuations.
• $ROSE token will also unlock 176 million tokens (worth $14 million) on Monday, representing 1.76% of the total supply.
• $PIXEL will unlock 54.95 million tokens on Tuesday, which constitutes 1.10% of its total supply.
• $ENA will release 12.86 million tokens (valued at $7 million) on Wednesday, accounting for just 0.08% of its total supply. Despite this small proportion, it may create market impact.
• $ID will unlock 18.49 million tokens (worth $7.5 million) on Friday, representing 0.92% of the total supply.
• $FIDA will release 18.21 million tokens (worth $5 million) on Saturday, constituting 1.82% of its total supply. This could present new opportunities for investors.

Critical Data and Events in the Forex Market

Tuesday (November 19):

• The United Kingdom will release its Monetary Policy Report, and the speeches of central bank officials could significantly affect the market. Additionally, the Consumer Price Index (CPI) data for Canada will be released, with an expected 0.4% drop in inflation, which could impact the Canadian Dollar.
• In the United States, Building Permits data will be published, reflecting the health of the construction sector. A higher-than-expected figure could indicate economic recovery. Moreover, CFTC Chairman Behnam’s speech may introduce volatility in the markets.

Wednesday (November 20):

• The United Kingdom will release its CPI data, with an expected annual inflation rate of 2.2%. This could impact the British Pound.

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• In the Eurozone, ECB President Christine Lagarde will give a speech, which could be crucial in understanding the pressures on the Euro and potential interest rate changes.

Thursday (November 21):

• In the United States, the Philly Fed Manufacturing Index and Unemployment Claims data will be released. These figures could be decisive for short-term dollar movements. Additionally, CB Leading Index and Existing Home Sales data will offer insights into the future of the U.S. economy.

Friday (November 22):

• In the United States, Existing Home Sales data will be released, followed by the Consumer Confidence Index, which will provide critical information on consumer spending and the housing market, thus affecting the broader economic outlook.

Analysis of the Week’s Key Events

The period from November 18 to November 22 is marked by significant token unlocks in the cryptocurrency market and the release of important economic data in the Forex market. Investors should pay close attention to central bank announcements and inflation data, as they could have a major influence on market sentiment.

In the cryptocurrency market, the unlocking of tokens could lead to short-term price volatility, so careful monitoring of these events is essential. The upcoming central bank speeches and token releases could shape the market’s direction, creating opportunities but also risks. Therefore, developing a cautious strategy and closely analyzing the data will be crucial.

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