The cryptographic community has its eyes on the next FOMC meeting in May, with discussions on the question of whether Jerome Powell and the Fed will reduce interest rates. However, traders are betting against this and instead, expect the American central bank to hold the prices despite calls from US President Donald Trump.
Will the Fed reduce rates after the FOMC meeting in May?
CME Fedwatch data Shows that there is only a probability of 9% of the Fed reduction interest rate between 400 and 425 base points (BPS) after the FOMC meeting, which will take place between May 6 and 7. Meanwhile, there are 91% chance that the Fed will maintain the stable rates between 425 and 450 bps.
Polymarket traders also bet on the Fed, maintains stable interest rates. The data of the prediction platform show that there is a 90% chance that interest rates remain unchanged after the May meeting. There are 9% and 1.2% like the FOMC reduces the rates of 25 basic points and 50 base points, respectively.
It should be mentioned that Bank of America earlier this month predicted that there would be four Fed rate reductions this year. They expect the first rate drop in May, the others to come in July, September and December.
However, it is understandable why traders are betting against a rate drop that occurs at the next FOMC meeting. In a recent speech, the president of the Fed, Jerome Powell, suggested that they had no intention of reducing rates until they determine to what extent Trump's prices could have an impact on the economy.
In his speech, Powell also suggested that prices will probably lead to higher inflation, which is why they are prudent to rush to facilitate monetary policy.
Meanwhile, US President Donald Trump insisted that it was the right time for Powell and Fed to reduce interest rates. Trump warned against a slowdown in the American economy if Powell and his committee refuse to reduce rates.
Why the Fed is unlikely to reduce rates
In a post X, the market expert, Kevin Green, said that prices were increasing, that new orders are down and that the general activity is in the process of chat, which is why the Fed is unlikely to reduce interest rates at the FOMC meeting in May.
He pointed out that the American central bank does not reduce rates without a significant crack on the labor market. The expert also suggested that the Fed is unlikely to reduce prices at the June FOMC meeting, declaring that time is exhausted for the data point to justify a decrease in June.
Participants in the market will have their eyes on the inflation reports of the American GDP and PCE, which will be published on April 30. These data may have an impact on the chances of the Fed decision at the May meeting.
Although a drop in rate seems unlikely for the moment, a potential decline would undoubtedly be optimistic for the price of Bitcoin and the wider market of cryptography. The softening of monetary policy leads to a capital injection into these risk assets.
Boluwatife Adeyemi
Boluwatifone Adeyemi is a writer and publisher of new experienced crypto who has covered subjects that have crossed several subjects and niches. Boluwatife has the talent to simplify the most technical concepts and facilitate understanding of cryptographic beginners. Far from writing, he is a passionate basketball lover, a traveler and a part-time dengen.
Warning: The content presented may include the author's personal opinion and is subject to the market state. Do your market studies before investing in cryptocurrencies. The author or publication does not hold any responsibility for your personal financial loss.
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