Fed Holds Key Rate; Bitcoin Slips Modestly

On September 20, the U.S. Federal Reserve (Fed) kept the target range for the federal funds rate at 5.25–5.50%.

The decision was in line with market expectations. According to the Fed, inflation in the United States remains elevated, the unemployment rate is low, and economic activity continues to grow at a steady pace.

«The U.S. banking system is sound and resilient. Tighter lending conditions for households and businesses are likely to affect economic activity, employment and inflation. The magnitude of these consequences remains uncertain. The Committee remains very attentive to inflation risks», the press release said.

The Fed will continue to pursue maximum employment and a long-run inflation target of 2%. If necessary, the agency is prepared to adjust the federal funds rate range.

On September 13, the U.S. Bureau of Labor Statistics published a CPI report. The index reading came in above market expectations — year-over-year growth slowed from 4.7% to 4.3%, and month over month it rose from 0.2% to 0.3%.

Nasdaq Composite, the S&P 500, and the Dow Jones Industrial Average reacted to the Fed decision in a muted fashion, shedding less than 0.5%.

The cryptocurrency market barely reacted to the news. According to CoinGecko, the quotes of the largest-cap digital assets showed no significant movement.

Bitcoin initially traded below $27,100, then recovered to around $27,200. At the time of writing, total cryptocurrency market capitalization remained above $1.1 trillion.

Back in February 2023, the key rate rose to 4.5-4.75% per year. In March, the rate reached 4.75-5%, and in May — 5-5.25%.

In June, the Fed, for the first time since March 2022, kept the target range at 5–5.25% per year. Bitcoin’s price fell below $26,000.

In July, the rate rose to 5.25-5.5% per year, but Bitcoin prices hardly reacted to the changes.