With no Federal Reserve meeting scheduled until March, crypto investors are closely monitoring macroeconomic data. The Fed’s decision to slow down or even pause interest rate cuts for several meetings has negatively impacted risk markets. However, the trajectory may shift depending on upcoming data. What lies ahead for cryptocurrencies?
US PCE Data and Crypto Market Impact
Fed Chair Jerome Powell recently stated that a rate cut in March might be premature. While markets anticipate the first cut in June, upcoming economic indicators will determine the final decision. Former President Donald Trump has been vocal about high interest rates and aims to bring inflation down by reducing energy prices to pave the way for lower rates.
In December, the PCE inflation data for November showed a 2.4% annual increase, slightly above October’s 2.3%. For January, the forecast was 2.6%, with monthly growth expected at 0.3%, up from the previous 0.1% increase.
The actual PCE inflation rate matched the 2.6% forecast, signaling stability. While there was no unexpected spike, the FOMC’s cautious stance and recent economic reports suggest that February may start on a calmer note for financial markets. Fed member Michelle Bowman is set to speak soon, and her insights could provide further market direction.
As macroeconomic data continues to shape investor sentiment, the crypto market remains on high alert. How will digital assets react to the latest PCE data and the Fed’s evolving stance on monetary policy?
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