On June 14, 2023, the Federal Open Market Committee (FOMC) of the Federal Reserve (Fed) maintained interest rates at the 5-5.25% target range after ten consecutive rate hikes. The Fed said it would assess additional information and its implications for monetary policy.
According to the FOMC, although recent indicators suggested that economic activity continued to expand at a modest pace with robust job gains and a low unemployment rate, inflation remained elevated.
The FOMC said that it would continue to monitor the implications of incoming information for the economic outlook and is prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals of achieving maximum employment and inflation at the rate of 2% over the longer run.
According to the U.S. Bureau of Labor Statistics, the May U.S. Consumer Price Index (CPI) rose by 0.1% in May 2023 after increasing 0.4% in April. Over the last 12 months, the all-items index increased by 4.0% before seasonal adjustment. Shelter and used cars and trucks contributed the most to the monthly increases.
In a June 15, 2023 press release, the Governing Council of the European Central Bank (ECB) raised the three key ECB interest rates by 0.25%, effective June 21, 2023. The interest rate on the main refinancing operations, the marginal lending facility, and the deposit facility will increase to 4.00%, 4.25%, and 3.50%, respectively.
The ECB noted that though inflation has been coming down, it is projected to remain too high for long. In the press conference following the ECB’s interest rate decision, Christine Lagarde, President of the ECB, said that energy, food, and the war in Ukraine all posed upside risks to inflation.
Lagarde further said that though energy and food price inflation had trended lower in May 2023, past increases in energy costs were pushing up prices across the economy. According to the ECB’s Governing Council, future interest rate decisions will return inflation to the 2% medium-term target.
Shortly after the US Fed’s interest rate announcement, Bitcoin and Ether traded below US$25k and US$1,700, respectively. Most other major altcoins also witnessed price declines following the Fed interest rate announcement.
Analysts have attributed the fall in crypto prices to the possibility of further Fed interest rate hikes later in the year. The next FOMC meeting is scheduled for July 25-26, 2023.
Following the ECB’s interest rate announcement, crypto prices have remained at relatively the same levels over the past 24 hours.
- SEO Powered Content & PR Distribution. Get Amplified Today.
- EVM Finance. Unified Interface for Decentralized Finance. Access Here.
- Quantum Media Group. IR/PR Amplified. Access Here.
- PlatoAiStream. Web3 Data Intelligence. Knowledge Amplified. Access Here.
- Source: https://zycrypto.com/crypto-prices-dwindle-as-ecb-hikes-interest-rates-while-us-fed-hits-pause/
