Fed Sees Just One Rate Cut This Year; Bitcoin Gives Up Session Gains

As
expected,
the
Federal
Open
Market
Committee
of
the
U.S.
Federal
Reserve
Wednesday
held
its
benchmark
fed
funds
rate
range
at
5.25%-5.50%,
but
its
economic
outlook
now
calls
for
just
one
25
basis
point
rate
cut
this
year.

“In
recent
months,
there
has
been
modest
further
progress
toward
the
Committee’s
2
percent
inflation
objective,”
said
the
FOMC
in
its

policy
statement.
The
“modest”
wording
is
notable
because
the
previous
policy
statement
complained
of
a
“lack
of
progress”
towards
lower
inflation.

Updating
its
economic
projections,
the
Fed’s
median
expectation
for
the
fed
funds
rate
at
year-end
2024
is
now
5.1%
versus
4.6%
three
months
ago.
This
means
the
central
bank
is
now
anticipating
just
one
25
basis
point
rate
cut
this
year
versus
75
previously.
The
2025
year-end
fed
funds
expectation
is
now
4.1%,
suggesting
100
basis
points
in
rate
cuts
next
year.

At
his
post-meeting
press
conference,
Fed
Chairman
Jerome
Powell
said
inflation
remains
too
high
and
the
central
bank’s
focus
remains
on
returning
that
gauge
to
its
2%
target.

Earlier
today,
the
U.S.
Consumer
Price
Index
report
for
May

showed
an
unexpected
slowdown
in
inflation
last
month.
The
news
sent
crypto,
stock
and
bond
markets
sharply
higher
as
traders
ratcheted
upward
their
expectations
for
the
commencement
of
Fed
rate
cuts.

The
hawkish
turn
in
the
Fed
economic
projections,
later
confirmed
by
Powell
in
his
press
conference,
has
taken
the
steam
out
of
those
rallies.
Bitcoin

(BTC)
at
19:00
UTC
had
returned
back
to
$67,300,
flat
over
the
past
24
hours.
U.S.
stocks
and
bonds
closed
the
day
with
gains,
but
well
off
session
highs.

Update
(19:15
UTC,
6/12/24):

Adds
comment
from
Powell
press
conference
and
price
reaction.