US Fed FOMC Meeting Today: Will Powell Spark Rally or Sell-Off?

US Fed FOMC Meeting Today: Rate Cut Unlikely as Global Tensions Keep the Federal Reserve Cautious

All eyes are on the United States Federal Reserve today as it prepares to announce its latest decision on interest rates following the conclusion of the highly anticipated Federal Open Market Committee (FOMC) meeting. The decision, scheduled for release at 2 PM Eastern Time, will be followed by a crucial press conference from Fed Chair Jerome Powell that could provide hints about the future of U.S. monetary policy.

The crypto and stock markets, already under pressure from global economic uncertainties and geopolitical tensions, are bracing for what could be a market-moving event.

Why a Rate Cut Is Unlikely Today

Market analysts and economists overwhelmingly predict that the Fed will maintain its current interest rates. Data from the CME Group’s FedWatch Tool indicates that 99.9% of market participants expect the central bank to hold rates steady at their current levels.

Source: CME Group

This consensus comes amid rising geopolitical tensions, most notably the escalating conflict between Israel and Iran, which has added volatility to global markets. The Federal Reserve, tasked with ensuring economic stability while fighting inflation, appears to be in no mood to shift gears in the face of these uncertainties.

Inflation, while showing signs of easing in recent months, remains above the central bank’s long-term target of 2%. Additionally, new tariffs on imported goods — measures that could complicate the inflation outlook — have yet to be implemented. These factors are combining to keep the Fed in a cautious stance.

Adding to the intrigue, political pressure on the Fed has intensified. Former President Donald Trump recently criticized Jerome Powell, calling him a “numbskull” for not implementing deeper rate cuts sooner. Trump argued that a 2-percentage point rate reduction could save the U.S. economy $600 billion. However, Powell and his colleagues at the Fed have so far resisted such calls, determined to stay focused on their inflation-fighting mandate rather than bow to political demands.

Powell’s Speech Could Shape Market Sentiment

While the rate decision itself may be a non-event, the spotlight will shift to Powell’s post-meeting press conference. Investors will dissect every word of his remarks for clues about the Fed’s future direction.

If Powell strikes a dovish tone, suggesting that rate cuts could be on the horizon later this year, markets may respond positively. Risk assets like stocks, cryptocurrencies, and emerging-market currencies could see an immediate boost as investors gain confidence that monetary conditions will ease.

On the other hand, if Powell maintains a hawkish stance, emphasizing that rates will stay higher for longer to ensure inflation is fully under control, risk assets could suffer. Such a stance could trigger renewed selling in cryptocurrencies like Bitcoin and Ethereum, both of which are sensitive to shifts in interest rates.

How the Crypto Market Is Reacting Ahead of the Decision

The cryptocurrency market is already showing signs of anxiety. As of this morning, the global crypto market capitalization has declined by approximately 1.82% in the past 24 hours. Bitcoin (BTC) is down 1.40%, while Ethereum (ETH) has dropped 1.47%, according to data from CoinMarketCap.

If the Fed surprises markets with a rate cut — however unlikely that may be — it could trigger a sharp rally in digital assets. Lower interest rates generally make riskier investments more attractive, as the opportunity cost of holding such assets declines.

Conversely, if the Fed keeps rates steady as expected and signals no immediate plans to cut, or if Powell’s language hints at further tightening, it could spark further declines. Traders are positioning cautiously ahead of the announcement, with many reducing exposure to volatile assets in case of unexpected hawkish signals.

Global Tensions Complicate the Picture

It’s not just domestic economic conditions influencing the Fed’s thinking. The geopolitical landscape has grown increasingly complex in recent weeks. The Israel-Iran conflict, with its potential to disrupt oil supplies and further destabilize the Middle East, is weighing heavily on global markets.

Higher oil prices could feed through into U.S. inflation, complicating the Fed’s efforts to bring price increases under control. This external pressure further reduces the likelihood of a rate cut at this juncture.

In addition, global supply chains remain fragile, and the threat of new tariffs looms large. The Fed, therefore, faces a delicate balancing act as it seeks to support economic growth while keeping inflation in check.

The Stakes for the Crypto Market

For cryptocurrency investors, today’s FOMC meeting could prove to be a pivotal moment. The digital asset market has endured a difficult few months, with prices weighed down by regulatory uncertainty, profit-taking, and macroeconomic headwinds.

A rate cut, however unlikely, could provide a spark. Historically, periods of looser monetary policy have coincided with strong rallies in Bitcoin, Ethereum, and other leading cryptocurrencies. More liquidity in the financial system often finds its way into riskier corners of the market, fueling speculative fervor.

On the flip side, a reaffirmation of the Fed’s commitment to tight monetary policy could prolong the crypto bear market. Risk-averse investors might continue to steer clear of digital assets in favor of safer havens like bonds or cash.

Looking Beyond Today’s Meeting

Today’s meeting may set the tone for the rest of the summer. The next FOMC gathering is scheduled for July 30, and according to CME’s FedWatch tool, around 85.5% of analysts currently expect no change in rates at that meeting either.

However, markets will be hanging on Powell’s guidance about what could prompt a policy shift. Factors such as incoming inflation data, labor market trends, and the evolution of global conflicts will all play into the Fed’s calculus in the weeks ahead.

Final Thoughts: A Critical Juncture for Markets

Whether you’re a crypto trader, stock investor, or simply someone watching the broader economy, today’s FOMC decision and Powell’s remarks will offer valuable insight into where the U.S. economy may be heading next.

In an environment already fraught with uncertainty, the Fed’s choices — and its words — carry enormous weight. Investors are bracing for a potentially volatile trading session, knowing that what happens today could influence market trends for weeks to come.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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