The latest minutes of the Federal Open Market Committee (FOMC ) have been published and offer insights into the US Federal Reserve’s (Fed) deliberations on monetary policy. This is not good news for the crypto industry: a rate cut is still pending, which has a direct impact on risky assets such as Bitcoin (BTC) and Ethereum (ETH).

Interest rate cut not forthcoming for the time being

The Fed does not make hasty decisions when it comes to cutting interest rates. The FOMC minutes from the January 28-29 meeting show that almost all members of the central bank believe that employment and inflation are currently well balanced. Therefore, the Fed is opting for a wait-and-see approach: first they want to get clarity on economic developments and inflation before making any changes to interest rate policy.

This is not good news for the crypto market. Risky assets such as cryptocurrencies often perform better when interest rates fall. Why? Because loans then become cheaper, which gives investors more room to invest capital in growth markets. A longer absence of interest rate cuts therefore means less financial incentive for additional investment.

Play it safe

The Federal Reserve does not want to act hastily and cause unnecessary volatility in the economy. The central bank emphasizes that the labor market remains strong and that interest rate cuts will only be considered if inflation continues to fall. In addition, current geopolitical tensions and trade conflicts play an important role in its decision to wait and see for the time being. The Fed is therefore opting for a patient approach rather than taking unnecessary risks.

Impact on the Crypto Market

Following the release of the protocols, the crypto market has reacted surprisingly mildly. While one might expect a decline, we see slight increases in Bitcoin (BTC) and Ethereum (ETH), up 1.1% and 0.4% respectively in the last 24 hours.

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Margharet Tess

Editor, Developer at Cryptheory Labs

I have been active in the cryptocurrency world for over 6 years, during which I have written countless articles about this sector. What fascinates me most about cryptocurrencies is their technological aspect and the problems they aim to solve. In the past three years, I have ventured into app development and am currently working on a larger project called P2E Buzzer. Stay tuned for the surprise. 🙂 My previous experiences: Business2Community.com, TradingPlatforms.com

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