Today, global markets focused on the FED's interest rate decision, which will be announced at 21.00 CET.
It is eagerly awaited whether the FED will end the rate hike cycle that it started in March 2022. The general expectation is that the FED will not raise interest rates tonight, but according to economists, skipping the interest rate today does not mean that interest rate hikes are over.
Economists, who do not expect a rate hike tonight, do not expect a signal that the interest rate hike cycle has come to an end. The general expectation is that the FED will make a statement that it will make interest rate decisions from meeting to meeting depending on the data.
Michael Contopoulos, the famous director of investment company Richard Bernstein Avisors LLC, stated that although the markets were not at this meeting, they expected another 25 basis point interest rate increase from the FED in the upcoming period, but he did not expect this unless there was a surprise in the CPI.
“The bond markets expect and price a rate hike and a rate cut from the Fed in 2023.
If the FED does not cut interest rates in 2023, growth will fall so sharply that it will have to cut too many interest rates in a short time.
In my estimation, if the CPI does not rise above expectations, the FED will completely stop the rate hikes. Bond markets are pricing in a 200 basis point rate cut in 2024, suggesting a recession won't happen until next year."
How Does Bitcoin Move When Interest Rates Are High and Fixed?
We don't have many examples of how Bitcoin would act in a scenario where the Fed keeps interest rates fixed at a certain level. The only example in this regard is the example of 2019. As we shared with our followers on Twitter before; Between December 2018 and June 2019, when the FED kept interest rates constant at 2.5%, Bitcoin experienced a 339% rise. This example shows that keeping interest rates fixed has a positive effect on risky assets like Bitcoin.
Will we experience a similar rally in the upcoming period with the FED keeping interest rates unchanged tonight? We will be following.