This week, the focus is squarely on the Federal Reserve as it gears up for its rate decision on November 1, 2023, at 2:00 pm. Following the lead of the European Central Bank (ECB) last week, expectations are that the Fed will maintain the target range for the federal funds rate at 5.25 to 5.5. According to the CME FEDWatch tool, a whopping 96.2% of analysts expect no change.
However, the financial landscape today is far more fragile than it was a year ago. The Fed faces a delicate balancing act as it grapples with inflation while being wary of triggering a severe recession.
Federal Reserve Chair Jerome Powell recently hinted at the possibility of pausing the historic run of interest-rate hikes. This pause would be contingent on steady progress regarding inflation, and it’s a move that could provide a bullish nudge to Bitcoin and the broader crypto market.
Powell’s speech also brought forth differing opinions, with some experts critical of the Fed’s role in current inflation woes. Critics argue that the pandemic isn’t solely responsible for inflation; the Fed and the government’s fiscal policies have also played a significant role.
Bank of America, on the other hand, foresees no further interest rate hikes in November, citing concerns about financial tightening. Nonetheless, they keep December as a potential candidate for a hike due to strong spending and inflation data.
The impact of the Fed’s decision on gold is noteworthy. Gold’s price has been steadily climbing, rising by 1.35% recently and a remarkable 11% since October 6. Bitcoin tends to follow gold’s lead, often serving as a hedge against turmoil in the US government bond market and global crises.
However, as the FOMC meeting looms, Bitcoin has experienced some profit-taking, with the cryptocurrency retreating below $35,000. How Bitcoin responds to the November 1st FOMC decision remains a point of interest for market observers.
With so much at stake and a fragile financial landscape, all eyes are indeed on the Fed as we approach this pivotal decision. Stay tuned for updates and insights as we navigate these dynamic economic waters.
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The Upcoming November 1st FOMC Meeting: What to Expect
