Precious Metals, Cryptocurrencies and Stock Markets Tumble After Powell’s Statements on Rising Rates Cryptocurrency

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Stocks, crypto markets and precious metals fared well in early morning trading sessions on Wednesday, just before the US central bank wraps up its Federal Open Market Committee (FOMC) meeting. While the Fed said in a statement that the benchmark interest rate would soon rise, central bank leader Jerome Powell said the committee “is of the view that the federal funds rate should be increased at the March meeting. Powell’s statements following the meeting, alongside discussions of balance sheet reduction, were viewed as hawkish by investors and global markets fell in value.

FOMC announces plans to raise federal funds rate ‘soon’, Fed Chairman Jerome Powell insists rates will change in March

After a week of lackluster markets, the highly anticipated Federal Open Market Committee (FOMC) meeting took place and committee members unanimously endorsed the decision to hold rates near zero.

“With inflation well above 2% and a strong labor market, the Committee expects it will soon be appropriate to raise the target range for the federal funds rate,” the FOMC said in a statement Wednesday. While the financial institution’s statement emphasized “soon,” that meant the US central bank planned to keep the base interest rate range intact, at least for now.

“Inflation risks are still on the upside in the opinion of most FOMC participants, and certainly in my opinion as well. There is a risk that the high inflation we are seeing will continue. There is a risk of it going even higher So we don’t think that’s the base case, but, you asked what the risks are, and we need to be able with our monetary policy to deal with all the outcomes plausible,” Powell told attendees of the press conference.

Fed Chairman Jerome Powell spoke after the meeting and explained that the benchmark rate could rise in March. Powell also noted that shrinking the Fed’s balance sheet will take some time.

“The toll is much bigger than it should be,” Powell told reporters. “There is a substantial amount of shrinkage in the balance sheet to do. That will take time. We want this process to be orderly and predictable. With everyone still clinging to the FOMC’s “soon” statement, Powell pointed out:

The committee’s view is to increase the federal funds rate at the March meeting assuming conditions are right.

Stocks, Crypto Markets and Precious Metals Fall Following Fed Statements

When the stock markets closed, the NYSE fell 103 points and the Dow Jones Industrial Average fell about 129 points. The Nasdaq index managed to stay above a few percentage points and the S&P 500 lost a few percentage points.

The price of one ounce of .999 fine gold fell 1.77% and the value of one ounce of .999 fine silver fell 2.48%. Of course, gold bug and economist Peter Schiff threw his two cents on the Fed meeting and Powell’s statements.

“Powell said the Fed would start reducing its balance sheet when the time is right,” Schiff said. tweeted. “He then said he really had no idea when it might happen because the FOMC hadn’t even discussed it yet. Oh, what exactly do they talk about when they meet, sports? We we’re screwed and they know it. Some people trolled Schiff because the price of gold fell after Powell’s statements.

The global cryptocurrency market cap didn’t fare too well either, as it fell more than 2% to 1.71 trillion. The main crypto asset bitcoin (BTC) was quite volatile and within two five-minute candles before the release of the Fed statements, BTC fell from $37,400 to $38,946 on Bitstamp.

BTC/USD five-minute chart via Bitstamp at 2:00 p.m. (EST) on January 26, 2022.

The metrics show bitcoin (BTC) had a 24-hour price range between $35,300 and $39,310 per unit during the day. Many other top ten crypto assets lost between 2% and 7% within hours of Powell’s statements.

Keywords in this story

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What do you think of the FOMC meeting and Jerome Powell’s statements? What do you think of the market reaction that followed? Let us know what you think about this topic in the comments section below.

Jamie Redman

Jamie Redman is the News Manager at Bitcoin.com News and a fintech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He is passionate about Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written over 5,000 articles for Bitcoin.com News about disruptive protocols emerging today.




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