Despite the severity of the market decline, several encouraging developments have surfaced. The data boosted the values of stocks and cryptocurrencies on the hope that lesser consumer-price increases could provide the Federal Reserve with greater room to slow down the pace of interest-rate hikes.
The Consumer Price Index (CPI) grew 7.1% year-over-year, the U.S. Labor Department announced Tuesday, below the 7.3% predicted by economists in a survey conducted by FactSet. Bitcoin (BTC +4.42%), rose 1.6% in the minutes following the report’s release, to approximately $17,930.09, and is up 4.42% over the past twenty-four hours. Ethereum (ETH +5.86%), has gained 5.86% over the past 24 hours reaching a high of $1,341.44.
The Dow Jones Industrial Average (DOW +1.58%) increased by 528.58 points, or 1.58 percent, to reach 34,005.04. It was the first closing price over $34,000 since December 2. The S&P 500 (S&P +1.43%) surged 1.43% to end the day at $3,990.56, while the Nasdaq Composite (NASDAQ +1.26%) rose 1.26% to $11,143.74.
The Federal Open Market Committee, or FOMC, which determines the monetary policy of the U.S. central bank, is meeting this week. A conclusion is expected along with new estimates by officials on the trajectory of economic indicators. To stop inflation, the Fed has increased rates at an unprecedented rate. It is expected that the Fed will continue to hike rates, perhaps not as aggressively, in light of recent pronouncements from the Fed and evidence that inflation is receding. Prior rate increases were closer to 0.75%, but the upcoming increase is anticipated to be closer to 0.5%. The November CPI release is the last significant economic data of 2022 and the last key input the FOMC will get before Tuesday’s start of this week’s meeting.
Will Interest Rate peak next year?
Fed Chair Jerome Powell has previously suggested that he and his colleagues expect the interest rate to peak next year, most likely at a higher level than the 4.9% that was previously forecast. According to Deutsche Bank, the rate might reach 5.1% prior to the Fed’s withdrawal from its campaign.
The Summary of Economic Projections, also known popularly as the dot plot, will be the highlight of the Federal Reserve’s December conference. Investors will pay particular attention to these projections for hints about the trajectory of future rate hikes. Investors are concerned that the Fed will demonstrate a more aggressive monetary policy tightening path, signaling that there would be additional rate hikes next year.
“We expect the dot plot to lean hawkish, reinforcing the committee’s view that policy will need to remain restrictive for longer to guide inflation back to target,” the note said.
The two-day session will finish on Wednesday with the release of a statement at 2:00 p.m. ET.
Rickie Sebastian Sanchez is an article writer specializing in cryptocurrency news. Since late 2017, he has been actively investing in cryptocurrencies. He is enthusiastic about everything that has to do with crypto and he hopes that the readers of his articles in the years to come will gain a massive understanding of blockchain technology.
