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Powell: Fed Holds Steady as Inflation Shows Signs of Easing

Coin WorldWednesday, Jan 29, 2025 4:26 pm ET

1min read

Based on the provided news articles, here's a summarized and structured news article in the style of Bloomberg:

Powell: Fed to Stand Pat Until Seeing More Progress on Inflation

The Federal Reserve, led by Chair Jerome Powell, is expected to maintain its current interest rate policy at its upcoming meeting, as inflation data has shown positive signals for the past two months. However, the Fed is still waiting for further confirmation of the inflation trend before considering additional rate cuts.

Powell stated that the Fed needs to see substantial progress on inflation or a deterioration in the labor market to consider a rate cut. However, inflation data has been positive, with the latest CPI report showing a 0.1% increase in February, below the 0.4% increase in January. The core PCE price index, which excludes food and energy, also rose 0.1% in February, down from a 0.5% increase in January.

The Fed has been cutting rates aggressively in recent months, with three consecutive cuts totaling 75 basis points in 2024. However, the Fed has kept the rate steady since July 2023, aiming to stabilize high inflation and gradually reduce it to the target range of 2%.

The market is expecting the Fed to keep interest rates unchanged at the current range of 4.25% to 4.50%. The probability of a rate cut is low, with CME FedWatch data showing a 99.5% probability of the Fed maintaining the current rate and a 0.5% probability of a 25 basis point cut.

Analysts and traders are closely watching the Fed's statement and Powell's press conference for further guidance on future policy moves. The Fed's pause in rate cuts may be seen as a hawkish tilt, which could negatively impact cryptocurrency prices, as risk assets tend to underperform when the Fed adopts hawkish rhetoric.

However, some analysts expect the Fed to adopt a dovish tone if there are signs of policy softening, which could potentially boost Bitcoin and other cryptocurrencies. Earlier this week, Bitcoin experienced a sharp pullback in tandem with the tech-heavy Nasdaq-100 index due to the DeepSeek "black swan," but the cryptocurrency managed to recover in a relatively short amount of time.

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