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Skerdian Meta•Wednesday, January 29, 2025•2 min read
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The FED kept interest rates unchanged today, with the USD showing some volatility both way, while BTC, XRP and stock markets jumped higher, as Powell indicated a further reduction in rate cuts.
Bitcoin was trading around $103K before the meeting and dived to $101K after the statement was released, but bounced above 104K after Jerome Powell’s press conference, as risk sentiment improved and the USD sank lower. XRP also dipped below $3, but quickly rebounded higher. However, buyers are not showing any willingness to break above this month’s high, which is also the record high at $3.39.
Ripple Chart Daily – MAs Continue to Hold As Support
Before the meeting, markets had already priced in 46 basis points of rate cuts for the year. Initially, the US dollar strengthened, and risk assets declined following the removal of language indicating “progress toward lower inflation.” Instead, the focus shifted to inflation remaining elevated, signaling ongoing concerns about price pressures. However, the tone of Powell’s press conference took a dovish turn, leading to a reversal in the dollar’s gains.
January 29, 2025 FOMC Interest rate meeting
- No direct contact with the President regarding policy decisions.
- Current policy stance is less restrictive compared to the beginning of the rate-cut cycle.
- Labor market does not need to weaken further to achieve inflation targets.
- Policy stance remains unchanged and is considered well-positioned for economic conditions.
- Minor adjustments in policy language were made for clarity, with the removal of references to “progress toward the inflation goal” not intended as a policy signal.
- Central bank is in a holding pattern, monitoring government policy developments before making further moves.
- Further inflation progress is necessary, but there is confidence in a clear pathway to achieve it.
- Owners’ Equivalent Rent (OER), a key inflation component, is steadily declining.
- Non-market-driven prices remain high, posing challenges to inflation control.
- Conditions appear favorable for continued inflation progress, but further confirmation is needed before policy shifts.
Powell clarified that the change in inflation-related language was merely a technical adjustment, not an intentional signal. This clarification weakened the dollar, sparking a rally in cryptocurrencies and equity markets. Although an initial dovish remark in the headlines briefly pushed the dollar lower, uncertainty about whether Powell was referring to past or present policy caused a temporary rebound.
Later, Powell clarified that his comments referred to the policy stance at the time the rate-cutting cycle began, reinforcing the idea that policy is becoming less restrictive. His further explanation that the removal of the “inflation goal progress” phrase was not meant as a policy signal led to another surge in risk assets, particularly stocks and crypto. The Fed’s continued confidence in disinflationary trends was another dovish takeaway, reinforcing expectations that rate cuts are still likely in 2024.
- The exact neutral rate is uncertain, but current policy remains above most estimates of neutrality.
- Monetary policy is having a measurable impact, with clear effects on economic activity.
- There is no urgency to make additional policy adjustments, and a cautious approach is appropriate.
Bitcoin Live Chart
BTC/USD
Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst.
Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank’s local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
