Headline:
Fed's Decision to Maintain Interest Rates Boosts Bitcoin Value
Bitcoin Boosted by Fed's Tariff-Influenced Rate Hold
Story:
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The Federal Reserve did a U-turn on Wednesday, standing by its decision to keep interest rates unchanged in the face of Trump's on-going tariff war. With a target range of 4.25% to 4.5%, the Fed decided to keep things steady for the fourth consecutive time, much to the relief of Bitcoin enthusiasts. This move was largely anticipated despite weeks of needle poking from Trump towards Fed Chair Jerome Powell, urging him to slash interest rates.
Trump's trade tariffs have put the Fed in a sticky wicket, struggle-busing to assess how the escalating duties could boost inflation in the US or heap extra pressure on economic growth. Should the Fed maintain lofty rates for longer to combat any tariff-triggered price pressures, there's a risk it might stir up a slowdown in the economy-leading to a spike in unemployment. In a press conference after the decision, Powell acknowledged that Trump's tariff levels exceeded expectations and remain highly uncertain.
But fear not, America, the labor market has remained robust so far, with 177,000 jobs added in April, as per the U.S. Bureau of Labor Statistics. And ironically, amid dwindling consumer sentiment, inflation has actually cooled, creeping closer to the Fed's 2% goal like a sneaky cat. Who'd've thunk it, eh?
Bitcoin was coasting along at around $96,500 after the Fed's announcement, an improvement of approximately 1.7% in the hour following the news. Over the past week, BTC has swelled by around 22%, according to CoinGecko. This surge in Bitcoin following the Fed decision isn't entirely anomalous, as Bitcoin has often been seen as a safe haven during uncertain economic times.
Fed economists now see a 28% probability that the Fed will cut rates at their June meeting, as per CME's FedWatch. If this happens, Bitcoin's value might continue its upward trend, much to the delight of investors. But if you ask us, the future of Bitcoin is as unpredictable as a Trump tweet storm, so remember, invest at your own risk.
As for the tariff situation, while the 145% levies on goods from China are some of the highest, there's a glimmer of hope on the horizon. Treasury Secretary Scott Bessent is set to meet with Chinese officials in Switzerland later this week, suggesting that de-escalation is on the cards.
Stay tuned for updates as these trade talks continue to unfold. Until then, keep calm and HODL on!
[1] Tariffs manage to keep a lid on inflation for now: https://www.cnbc.com/2022/05/12/tariffs-manage-to-keep-a-lid-on-inflation-for-now.html
[3] Trump's tariffs bruise business sentiment: https://www.reuters.com/article/us-usa-trade-business/trumps-tariffs-bruise-u-s-business-sentiment-idUSKCN1SN219
Editor's note: This story was recently updated with new developments.
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- Despite Trump's pressure, the Federal Reserve decided to maintain the interest rates, potentially boosting Bitcoin's value, as it tends to serve as a safe haven during uncertain financial times.
- In the technology sector, the surge in Bitcoin's value following the Fed's decision wasn't entirely unusual, as cryptocurrencies like Bitcoin are often seen as a refuge during periods of economic uncertainty.
- As for business, the tariff situation may ease up shortly, as Treasury Secretary Scott Bessent is scheduled to meet with Chinese officials later this week, hinting at a possible de-escalation of trade tensions.
