#EconomicCalendar #FederalReserve #InterestRates #CryptoMarkets #ConsumerConfidence #JeromePowell #Inflation #CryptoInvestments
The upcoming week proves to be another bustling one for the economic calendar, with a number of key decisions due from the Federal Reserve likely to set the momentum for future policy changes. Chief among these is the anticipated decision on interest rates. Concurrently, crypto markets are seeing a resurgence – but this rise could be hindered by the week’s economic events.
The most considerable event in this week’s economic calendar takes place on January 31, with the US central bank’s policy meeting set to decide the rate. On the agenda is the discussion of consumer confidence reports, due on January 30, which are predicted to show a marginal improvement from the previous month. This is an important indicator as consumer spending contributes approximately 70% to US economic activity. On the same day, the Labor Department will unveil its December data on US job openings. However, the primary focus will be Fed Chair Jerome Powell’s press conference on Wednesday, where he is expected to maintain interest rates at a 22-year high of 5.25% to 5.5%.
Aside from these developments, analysts predict that the Fed may begin reducing the benchmark rate as early as March, a signal we could hear after this week’s meeting. This comes as markets project six rate drops in 2024, double the forecast by the Fed in the previous month. Given this scenario and that the consumer price index, which measures inflation, exceeded the Fed target last month, it seems the Fed might retain these elevated rates for longer.
High interest rates typically don’t play well with crypto markets as they allow savers to earn substantial returns on secure investments like cash deposits. The subsequent high debt repayments mean less available cash for riskier investments such as crypto. Despite this, the crypto market has recently enjoyed a 2.8% rebound, bringing its total market cap to $1.75 trillion. The leading cryptocurrencies, Bitcoin and Ethereum, have seen rises of 2.6% and 1.7% respectively. The week ahead will determine if these high returns can be maintained in light of potential economic changes.
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