The US Federal Reserve’s Federal Open Market Committee (FOMC) is scheduled to announce its rate hike decision on Wednesday. The FOMC is expected to maintain the target range for the federal funds rate at 5.25%-5.5%, which is the highest in 22 years.
Fed Chair Jerome Powell indicated that the committee will assess the impact of recent rate hikes as they approach the end of their campaign. Despite inflation remaining above the Fed’s 2% target, the FOMC is set to announce a “pause” for the second time this year. However, if inflation rises, the Fed may raise interest rates by another 25 bps by year-end.
In July, the annual PCE rate, the Fed’s preferred inflation measure, rose to 3.3% from 3% in June. The job market has cooled, with the unemployment rate increasing.
Major Wall Street firms predict a “pause” in September, but rising oil prices pose a risk of pushing inflation higher. JPMorgan, Goldman Sachs, Morgan Stanley, Barclays, BNP, BMO, Bloomberg, Nomura, RBC, and Wells Fargo forecast a pause, while Raymond James and Mizuho expect a 25 bps hike.
“We anticipate the Fed will keep rates unchanged at tomorrow’s FOMC meeting, while maintaining a tightening bias. We believe the 2023 median dot will continue to indicate one more hike this year, with a possibility of revising the longer-run dot higher.”
According to the CME FedWatch Tool, there is a 99% probability of a pause at the next FOMC meeting on September 20. Meanwhile, the US dollar index (DXY) remains above 105, posing a risk of continued pressure on BTC price.
Bitcoin Inches Toward $30,000
BTC price has increased by 1% in the past 24 hours, currently trading at $27,144. The 24-hour low and high are $26,918 and $27,488, respectively. However, the price remains volatile ahead of the Fed’s monetary policy decision.
Bitcoin has risen by 5% in a week as traders anticipate significant upward momentum after the FOMC announcement. This could bring back much-needed bullish sentiment, supported by improved technical chart patterns.