How Will FED’s Keeping Interest Rates Fixed Affect Bitcoin? What Do Bond Markets Price?

Today, global markets focused on the FED’s interest rate decision, which will be announced at 21.00 CET.

It is eagerly awaited whether the FED will end the rate hike cycle that it started in March 2022. The general expectation is that the FED will not raise interest rates tonight, but according to economists, skipping the interest rate today does not mean that interest rate hikes are over.

Economists, who do not expect a rate hike tonight, do not expect a signal that the rate hike cycle is over. The general expectation is that the FED will make a statement that it will make interest rate decisions from meeting to meeting depending on the data.

Although Michael Contopoulos, the famous director of investment company Richard Bernstein Avisors LLC, is not at this meeting, the markets will be in the upcoming period. from the FED He stated that he expects another 25 basis points interest rate increase, but he does not expect it unless there is a surprise in the CPI.

“The bond markets expect and price a rate hike and a rate cut from the Fed in 2023.

If the FED does not cut interest rates in 2023, growth will fall so sharply that it will have to cut too many interest rates in a short time.

In my estimation, if the CPI does not rise above expectations, the FED will completely stop the rate hikes. Bond markets are pricing in a 200 basis point rate cut in 2024, suggesting a recession won’t happen until next year.”

How Does Bitcoin Move When Interest Rates Are High and Fixed?

In the scenario where the FED keeps the interest rates fixed at a certain level, of bitcoin We don’t have many examples of how to act. The only example in this regard is the example of 2019. As we shared with our followers on Twitter before; of the FED Between December 2018 and June 2019, when interest rates were kept constant at 2.5%, Bitcoin had an increase of 339%. This example shows that keeping interest rates fixed has a positive effect on risky assets like Bitcoin.

Will we experience a similar rally in the upcoming period with the FED keeping the interest rates unchanged tonight? We will be following.

Between December 2018 and June 2019, when the FED kept interest rates constant at 2.5%, Bitcoin experienced a 339% rise. #FED #Interest #Bitcoin pic.twitter.com/RCkKCfoRHK

— Bitcoin System (@bitcoinsystem) March 17, 2023