Fed Hints at Lower Interest Rate Hike, What to Expect?

The rate of inflation in the U.S. has begun to slow down.

The CPI says that the annual rate went down to 6.5% in December. Talking about the inflation rate, it was at 7.1% in November and 9.1% in June 2022. Currently, Bitcoin has a base of around $23,000. When the CPI numbers came out in the middle of January, Mark Zandi, the Chief Economist at Moody's Analytics, said that people won't be talking about inflation this time next year. As the economy slowly gets back on track, the Federal Reserve is likely to slow the rate at which it raises interest rates.

Investors will also be paying attention to what Chair Powell says about the strength of the economy, the job market, the macro recovery, and other things. If he hints that he might ease up on rules in the future, a short-term spike is likely to happen. The new rate will be announced on Wednesday, Feb. 1, at 2 p.m. ET. The CME says that there is a 99.9% chance that interest rates will go up by 25 basis points, from 4.5% to 4.7%. Also, futures on interest rates show that the Fed's current cycle of raising rates may end in June.

Patrick Harker, president of the Philadelphia Fed, said in a recent speech that rate hikes of 25 basis points "will be appropriate" in the future. Also, he said, “I expect that we will raise rates a few more times this year, though, to my mind, the days of us raising them 75 basis points at a time have surely passed.” Also, if the Fed does what is expected, a temporary rise caused by hype could help Bitcoin go over $25,400. But if investors think that the increase is a sign of hawkishness, then the price could drop to around $20.7k.

If the big picture stays good, the price should go up towards $32k by the middle of the year.