The Federal Reserve left rates unchanged on Wednesday, as analysts and economists expected. “Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been modest further progress toward the Committee’s 2 percent inflation objective,” the Fed said in Wednesday’s release.Wednesday’s announcement leaves rates at 5.25-5.5% percent and, despite a hot jobs report, a rate cut later this year is now back on the table for some analysts. The Fed’s decision comes after a cooler-than-expected Consumer Price Index report dropped Wednesday morning ahead of it, which helped offset the jobs number.“While inflation is moving in the right direction, the Fed will need to see this trend continue before they feel confident enough to lower rates. Should the recent trend continue, it should set the stage for lower rates in the second half of this year,” eToro’s Bret Kenwell told Blockworks.The report also helped boost bitcoin early Wednesday as it tries to reclaim $70,000. Both BTC and ETH held steady at $69,000 and nearly $3,600 following the news.“In our opinion the Committee will be finely divided between one and two cuts this year. With the hawks at zero or one cut and the doves at two, the swing voters (particularly among the Governors) will likely follow the Chair,” they continued. They point to Powell’s May conference as proof that the Chair will aim for two cuts this year,” JPMorgan analysts wrote last week. As mentioned in the Empire Newsletter early Wednesday, bitcoin’s correlation with equities is hitting levels not seen since 2022.Earlier this week, K33 noted that institutional traders on CME “de-risked…following negative US spot ETF daily flows, breaking a record 19 days of net inflows. CME’s annualized futures premiums stuck around 12% for both BTC and ETH last week but declined to a low of 6% on Tuesday, levels not seen since May 23.”Bitcoin fell to $66,000 on Tuesday as markets prepared for a “wild Wednesday,” as the analysts said. However, the more positive CPI print has buoyed both equities and the stock market. Powell is set to take the podium for his press conference shortly, and while analysts expect him to come off as dovish, his remarks have previously moved markets. “At the press conference, we expect Chair Powell will express confidence that the economy is still on the right path and that the FOMC can be patient in gaining confidence that inflation is heading toward two percent,” JPMorgan analysts wrote.Updated June 12, 2024 at 2:38 pm ET: Added Federal Reserve press release comment.Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.
