After the release of inflation data, the market expects that the Federal Reserve will keep the ierest rate consta in the curre range of 5.25 to 5.5 perce at its next meeting on September 20. While more than half of the traders predict that this rate will remain consta in November or December, the ceral bank has not yet ruled out the possibility of a further increase.
According to Forbes, considering ierest rate futures and considering that the Federal Reserve is usually not ierested in surprising the markets, it can be expected that there is little chance of an ierest rate increase in September.
However, according to the data of the CME’s FedWatch Tool, the probability of an ierest rate increase at the end of the next meeting of this institution, on November 1 (November 10), is about 35%, which shows that there is still a possibility of an ierest rate increase.
Both the release of economic data such as the consumer price index report this moh and the upcoming Federal Reserve report will help increase the likelihood of ierest rate changes in November. Of course, there is also the possibility of an ierest rate increase in the December meeting. However, the market view is that if another hike is on the way in 2023, it will most likely happen in November.
Federal Reserve policymakers will announce their short-term forecast of ierest rate changes for the end of 2023 at the September 20 meeting. Given that the Federal Open Market Committee will only have two more meetings uil the end of the year after this meeting, the report will carry importa clues about the rate change in November.
According to the Federal Reserve’s latest report in June, rates will move one notch above their curre level in 2023. The minutes of the July meeting of the Federal Reserve were also generally in line with this report. However, since then, economic data has shown a slowdown in inflation and some signs of slowing job growth. Two things the Fed was hoping to see with inflation coming down.
Because of this, markets wa to see if policymakers still believe another hike is on the way. So far, the Federal Reserve has expressed some skepticism about improving inflation, but this position could change.
Economic data perspective
Both the market and the Fed agree that we are nearing the peak of the curre ierest rate cycle. As Federal Reserve Chairman Jeremy Powell said in a rece speech, the think tank believes that one or two more ierest rate hikes are likely needed, depending on economic data. An issue that has also convinced the markets.
The latest consumer price index data also indicated a decrease in inflation and some early signs of a slowdown in labor market growth. Both of these are largely what the Fed was. However, with limited improveme in economic data and the possibility of further house price increases, there are still concerns about the Fed’s fight against inflation.
Digital currency market reaction
It seems that the reaction of the digital currency market is also positive towards the possibility of the ierest rate remaining stable in the last session of September. Powell noted on Friday in the presence of former Federal Reserve Chairman Ben Bernanke that the curre credit rating suggests we may not need to raise ierest rates as much as previously thought. In response to these statemes, the price of Bitcoin rose from around $25,400 to $26,000. The CoinDesk Market Index (CMI), which measures the market capitalization-weighted performance of digital currencies, also rose about 1% on the day.
Charles Edwards, the founder of Capriole Investmes and a Bitcoin trader, believes that the Federal Reserve will likely be forced to inject liquidity in the near future, given the curre conditions of large-scale investmes and price increases that have already been applied to the market. , especially if we see an increase in the unemployme index or a sharp decrease in consumer spending. According to him, as a result of the increase in the price of risky assets, including Bitcoin, it will align with next year’s halving.
