US base rate unchanged, Fed keeps rate at 5.5%

The Federal Open Market Committee (FOMC) has decided to leave US interest rates unchanged. It remains within the range of 5.25% to 5.50%, which is causing mixed reactions in the crypto world. The interest rate has therefore remained unchanged since July 2023, as the graph below also shows.

Inflation still too high

While unchanged interest rates would usually be cause for celebration in traditional markets, there was hope for a drop in interest rates in the crypto space. Lower interest rates bring more cheap money into the market, making riskier and more volatile assets like bitcoin more attractive.

But for now, Jerome Powell is sticking to the Fed’s plan to keep interest rates high until inflation drops back to 2%. While currency depreciation rose sharply to 9% as a result of the money printing during COVID, inflation has since fallen to 3.5%.

The high interest rates are to blame for this, but the percentage has not yet fallen to the 2% mandate. Powell is not yet satisfied and stands firm: interest rates remain at 5.5%.

Dates of analysis company Santiment does not see that a large number of altcoins rose after the FOMC news. Now that the decision has been made, it is more attractive for traders to make speculative purchases. Santiment looks at the so-called “social volume” of statements on social media around the search term “FOMC”. That peak was a lot higher than the past four interest rate decisions.

🇺🇸 The latest #FOMC decision has resulted in leaving US Interest Rates unchanged, continuing at a 5.25% to 5.50% range as it has stayed since July, 2023. In 2022, unchanged rates would be news worth celebrating.

However, many in #crypto were actually hoping for this May 1st… pic.twitter.com/evHQ68Iizq

— Santiment (@santimentfeed) May 1, 2024

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