The Federal Reserve of the USA kept interest rates at 4.25%, however, a decrease may occur in response to global challenges.
Fed's Decision on Interest Rates
The Federal Reserve decided to maintain interest rates at 4.25% during its meeting, which was expected by investors. The next monetary policy meeting is scheduled for July 30, but the Fed may act earlier if significant changes in the economic situation occur.
Geopolitical Risks and Trade Tensions
Rate cuts are a rare measure typically following a credit shock, geopolitical escalation, or sudden breakdown in financial stability. Rising tensions in the Middle East, especially in the strategically vital Strait of Hormuz, could lead to increased energy prices and additional economic risks. If trade tensions between the U.S. and China threaten exports, the Fed may be forced to consider cuts.
Weak Dollar and Bitcoin's Appeal
The recent drop in the dollar index (DXY) to 99 may signal further weakening of the dollar in case of unexpected rate cuts. In such circumstances, inflation-resistant assets like Bitcoin might become significantly more attractive to investors, making a price rise above $120,000 possible.
The market closely watches Fed actions and their potential impact on financial stability and Bitcoin prices, which can significantly affect the economy as a whole.
