Fed watchers anticipate a 0.25 or 0.50 percent increase in the federal funds rate.
According to the CME Fed Watch tool, there is a 72% likelihood of at least a 0.25 rate hike during the upcoming meeting, with the tool expecting a 0.50 rate hike. The Yahoo Finance Live team stated on Monday:
“The Fed has a big decision to make at its next meeting on May 2 to 3. The probability of another 0.25% hike is now at 72%. And that’s according to the CME Fed watch tool.”
The news of the rate hike will affect Bitcoin price and other crypto exchange markets, as well as other liquid financial markets such as equity and bonds, throughout April.
Fed Funds Rate Hike Expected to Start in May
The Federal Reserve is expected to raise rates due to the sustained show of strength in the US job market. Jesse Wheeler of CNBC’s Morning Consult said:
“That jobs report came in very strong and continues to show how strong and resilient the US labor market continues to be. I think that headline figure, the 236,000 jobs, albeit a slowdown from the pace we’ve seen over the last six months, is still strong enough coupled with that 3.5% unemployment figure to potentially warrant another rate hike here at the start of May.”
Congress has given the Federal Reserve the mandate of maximizing employment in the US and stabilizing dollar prices.
Bitcoin Price Surges Despite Wall Street Meandering
Wall Street had a flat day on Monday, with blue chip tech stocks pushing down the NASDAQ Composite by sliding, including Apple, Alphabet, and Tesla:
“[The S&P 500 Index] rose 0.1% to 4,109.11. The Dow Jones Industrial Average added 101.23 points, or 0.3%, to 33,586.52. Meanwhile, the Nasdaq Composite inched lower by 0.03% to close at 12,084.36.”
The BTC price surged 7% on Monday due to the news of the May interest rate hike. The rally broke resistance at $30,000 and hit a 10-month BTC. However, it is uncertain whether the rally was influenced by or despite the impending rate hike. With higher interest rates potentially reducing the liquidity flow that raises the price of Bitcoin and other investment assets, stocks may decline in response to rate increases, potentially dragging down crypto prices with them.
At the time of this writing, it is notable that BTC has remained relatively unaffected by the latest release of the CPI numbers for March, staying well above $30K.