The first meeting of the Federal Reserve (FED) of 2025 will conclude on Wednesday, with the scheduled rate for release at 7:00 p.m. UTC. He will be followed by the press conference of President Jerome Powell at 7:30 p.m. UTC.
The continuous objective range of the Fed for interest rates is 4.25% to 4.5%, which has decreased by 100 basic points since September. The December meeting saw a rate cut of 25 basic points, but the press conference that accompanies it and the forecasts indicated slower rate cuts by 2025, sending risk assets, including Bitcoin (BTC), lower.
However, Wednesday’s meeting is largely considered as a non -event for markets, including cryptocurrencies, since political leaders are expected to maintain stable rates while maintaining the aggressive term guide as of December.
“We doubt that this week’s FOMC meeting is an important market market, since the unchanged rate decision has been communicated well in advance in December. The minutes revealed that the participants have already made some preliminary assumptions about the policies of Trump, but given the considerable uncertainty, we doubt.
That said, Powell will probably face questions on the following key issues, and their answers could move the markets.
Illegal immigrants deportation
President Donald Trump is already fulfilling the promises of his campaign to expel illegal immigrants from the United States, with deportation flights implemented during the weekend. By estimates, total deportations could vary from one million to 10 million.
Analysts anticipate that substantial deportations will reinforce the strength of the labor market and contribute to inflation. If Powell shares a similar perspective, it could reduce the expectations of rates cuts, which can lead to a decrease in risk assets.
“The disappearance of up to 1 million potential workers of the United States workforce would not be little. Given the strength of Friday’s payroll report (December), a hardening in the United States labor supply would add more pressure to a Labor market that is already showing signs of hardening and has an unemployment rate close to the full employment level, “said Rabobank’s macro strategist of Rabobank, Benjamin Picton, in a note to customers earlier this month.
“That is inflation in itself, and that is before considering the additional impacts of the tax cuts and rates,” Picton added.
US debt roof.
The United States reached its self -imposed debt roof of $ 36 billion last week, which led to the treasure that begins extraordinary measures to keep the government working. One of the measures is to run on the current account of the Government in the Fed called the General Treasury account (TGA).
TGA spending generally facilitates liquidity conditions in the economy and markets, which increases risk taking. That could counteract the effects of continuous quantum tightening of the FED (generalization of the balance sheet).
Powell could get questions about it and can seek to sound in which the TGA spending adds liquidity to the system, thus limiting the advantage of risk assets for now.
Rental inflation
The main indicators point to a moderation in the inflation of the shelter, which has a huge influence on the consumer price index.
“The index” all rental tenant “of the Department of Labor, which leads the inflation of the refuge in the CPI, increased at a much slower pace the last quarter. It was 3.2% in the four finished quarters Q4 (vs. 3.9% in Q3 and 5.5% one a year ago).
Risk assets could increase if Powell recognizes the disinflar trend in the main inflation indicators of the shelter.
