The US Federal Reserve left the interest rate unchanged at its meeting in March, leaving the federal funds target range between 3.50 and 3.75. This decision means no changes to costs in two consecutive meetings. At a time when inflation has been high recently, the employment market has lost momentum and the ongoing war in the Middle East has affected the economy, the Bitcoin price is trying to stay at the $ 70,000 limit.
Fed’s Policy Decision and Market Reactions
There was a majority among Federal Open Market Committee members to keep interest rates at the same level. Only one member voted for a 25 basis point cut. The price of Bitcoin, which rose to $76,000 the previous week, fell below $70,500 after the Fed’s decision and decreased by 3.6 percent in the last 24 hours. While investors priced in rising inflation and global uncertainty, instantaneous fluctuations were also reflected in the crypto market.
Inflation, Geopolitical Tension and Central Bank Attitude
In the Fed’s statement, it was noted that inflation is still high and employment growth is weak. The unemployment rate rose to 4.4 percent in February. Bank officials emphasized that future policy steps will be shaped entirely in the light of data. Fed Chairman Jerome Powell pointed out the increase in energy prices at the press conference and stated that supply problems in the Middle East were effective in this increase.
Powell stated that inflation expectations have increased due to the increase in energy prices in recent weeks, that the economic effects of the tensions are not yet clear and that the data will be monitored carefully.
While the conflicts between the USA, Israel and Iran increased energy prices in particular, a loss in value was observed in Bitcoin and US stocks following the news that Israel attacked the South Pars natural gas field in Iran on Wednesday.
In the meeting text of the Fed, where it was stated that “Uncertainty is high in the current economic outlook”, it was emphasized that the effects of the developments in the Middle East on the US economy are uncertain.
Interest Expectations and Global Markets
Powell stated that tariffs also played an important role in the increase in consumer prices, and that the rates applied were close to the bank’s neutral policy level. Powell also reminded us of the importance of central bank independence for the dual goals of price stability and full employment.
According to market data, it is stated that cryptocurrencies have become more attractive than traditional assets in an environment where interest rates are low.
Analysts state that due to rising energy costs, persistent inflation and increasing geopolitical risks, market players are more cautious and there is some outflow from risky assets, especially cryptocurrencies such as Bitcoin.
OPEC crude oil price increased by 3.8 percent to $107.38 per barrel after the attack in Iran. In contrast, Bitcoin continued to trade above the $70,000 level, maintaining a weekly gain of 1.6 percent. Market participants continue to carefully monitor the possible monetary policy signals that Powell and the Fed will give in the coming period.
Powell’s Fed chairmanship will conclude in May, and Kevin Warsh is expected to take over the seat if confirmed. Powell, on the other hand, announced that he has no plans to resign as a board member.
Powell stated that he has no intention of leaving his position on the board before the investigation is completed.
At the time of writing, the Bitcoin price is hovering just above $71,000.
