The first meeting of the Federal Reserve (Fed) of 2025 will end on Wednesday, with the rate decision scheduled for 7:00 p.m. UTC. He will be followed by President Jerome Powell’s press conference at 7:30 p.m. UTC.
The FED continuous target fork for interest rates is 4.25% to 4.5%, which has decreased by 100 base points since September. The December meeting saw a drop in the rate of 25 base points, but the press conference and the accompanying forecasts reported slower rate drops for 2025, sending risk assets, including Bitcoin (BTC ), lower.
However, Wednesday’s meeting is largely considered to be a non-event for the markets, including cryptocurrencies, because political decision-makers should keep stable rates while maintaining the formidable advice from December.
“We doubt that this week’s FOMC meeting will be a major market for the market, because the unchanged rate decision has been well communicated in advance in December. The minutes revealed that the participants have already made preliminary preliminary assumptions On Trump’s policies, but given the considerable uncertainty, we doubt Powell will feel comfortable to provide solid advice markets, “customers told customers on Tuesday.
That said, Powell will probably face questions about the following key issues, and his answers could move the markets.
Expulsion of illegal immigrants
President Donald Trump is already good in his campaign promises to eject illegal immigrants from the United States, with expulsion flights deployed during the weekend. According to estimates, total deportations could vary from one million to 10 million.
Analysts predict that substantial deportations will strengthen labor market strength and contribute to inflation. If Powell shares a similar perspective, it could alleviate the expectations of rate reductions, which leads to a drop in risk assets.
“The disappearance of one million potential workers in American workforce would not be a small thing. Since the strength of the pay report on Friday (December), a tightening of the supply of labor ‘ American work would add additional pressure to a job market which is already showing signs of tightening and has an unemployment rate close to the full unemployment level, “said Benjamin Picton, the main macro-strarte of Rabobank, in a note customers at the beginning of the month.
“It is an inflationary in itself, and it is before considering the additional impacts of tax reductions and prices,” added Picton.
American debt ceiling
The United States struck its self-imposed debt ceiling of 36 billions of dollars last week, which led the Treasury to start extraordinary measures to operate the government. One of the measures is to run the government’s current account to the Fed called the General Treasury account (TGA).
TGA expenses generally facilitate liquidity conditions in the economy and markets, stimulating risk -taking. This could counter the effects of the current quantitative tightening of the Fed (process of normalization of the balance sheet).
Powell could get questions about the same and can try to avoid sounding pain while TGA expenses add liquidity to the system, thus capping the increase in risk assets at the moment.
Rent inflation
The main indicators underline a moderation of shelters inflation, which has a disproportionate influence on the consumer price index.
The “All Tenant” index of the Labor Department, which leads the inflation of the refuge in the IPC, increased at a much slower pace in the last trip a year ago).
Risk assets could increase if Powell recognizes the disinflationist trend in the main indicators of shelter inflation.
