Equities, crypto markets and precious metals did well during the early morning trading sessions on Wednesday, just before the U.S. central bank ended its Federal Open Market Committee (FOMC) meeting. While the Fed said in a statement that the reference interest rate will soon rise, the head of the central bank, Jerome Powell, said the committee “wants to raise the federal exchange rate at the March meeting.” Powell’s statements after the meeting, along with discussions on a reduction in the balance sheet, were viewed as hawkish among investors and global markets steeped in value.
FOMC says it plans to raise federal funds “soon,” Fed Chairman Jerome Powell insists that rates will change in March.
After a week of gloomy markets, the long-awaited Federal Open Market Committee (FOMC) meeting took place, and committee members unanimously approved the decision to keep tariffs at near-zero levels.
“With inflation well above 2 percent and a strong labor market, the Committee expects it will soon be appropriate to raise the target for the federal currency exchange rate,” the FOMC said in a statement on Wednesday. While the financial institution’s statement stressed “soon”, it meant that the US central bank plans to keep the basic interest rate untouched, at least for now.
Fed Chairman Jerome Powell spoke after the meeting and explained that the benchmark rate may rise in March. Powell also noted that lowering the Fed’s balance sheet will take some time.
“The balance is much bigger than it should be,” Powell told reporters. “There is a lot of shrinking in the balance sheet. That will take some time. We want this process to be orderly and predictable. “
The committee intends to raise the federal exchange rate at the March meeting on the assumption that the conditions are right to do so.
Stocks, Crypto Markets, Precious Metals Down Down Following Fed Statements
When stock markets closed, the NYSE dipped 103 points, and the Dow Jones Industrial Average fell about 129 points. The Nasdaq index managed to stay above a few percent and the S&P 500 dropped a few percent.
The price of one ounce of .999 fine gold slipped 1.77%, and the value of one ounce of .999 fine silver lost 2.48%. Of course, a golden bug and an economist Peter Schiff threw in his two cents on the Fed meeting and Powell’s statements.
“Powell said the Fed will start lowering its balance sheet in due course,” Schiff said tweeted. “He then said he really had no idea when that might happen because the FOMC hadn’t discussed it yet. Really? What exactly are they talking about when they meet, sports? We’re fished and they know it.” Some people troll Schiff because the price of gold has slipped after Powell’s statements.
The global cryptocurrency market capitalization did not do too well either, as it fell more than 2% to 1.71 trillion. The main cryptocurrency bitcoin (BTC) was quite volatile and within two five-minute candlesticks before the Fed’s statements were released, BTC jumped from $ 37,400 to $ 38,946 on Bitstamp.
Metric shows bitcoin (BTC) had a 24-hour price range between $ 35,300 and $ 39,310 per unit during the day. Many other top ten cryptocurrencies lost between 2% and 7% a few hours after Powell’s statements.
What do you think of the FOMC meeting and Jerome Powell’s statements? What do you think of the market reaction that followed? Let us know what you think about this topic in the comments section below.
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