In the economic world of the United States (US), one of the most influential institutions is the Federal Reserve System (The Fed). Within the Fed, there is an institution responsible for regulating US monetary policy, namely the Federal Open Market Committee (FOMC).
The main role of the FOMC is to maintain price stability (low and stable inflation) and achieve maximum employment levels in the US. To achieve this goal, the FOMC uses monetary policy tools, including determining the federal interest rate, namely the interest rate used by banks to lend money to each other in the US banking system.
Apart from discussing the FOMC, it is also important to note that recently investors have begun to pay attention to the crypto asset market, namely crypto assets, which are forms of digital assets that use cryptographic technology for security and transaction control.
Examples of the most well-known crypto assets are Bitcoin, Ethereum, Ripple, and Litecoin. Among investors, crypto assets are gaining popularity because of their high profit potential, the blockchain technology they use, the security they offer, and the opportunities for investment portfolio diversification.
So, to find out what the FOMC is, the FOMC meeting, the schedule, the term impact of the decision, and its impact on the crypto economy and market, see the review here.
What is FOMC?
FOMC stands for Federal Open Market Committee. Basically, the FOMC is the policy meeting board of the US central bank, which is part of The Fed or Federal Reverse System, which is the US central bank. Therefore, members of the FOMC are also members of the Fed.
For information, the FOMC consists of 12 members. This institution routinely holds FOMC meetings 8 times per year. Now, the FOMC is chaired by Jerome Powell, while Lael Brainard is his deputy.
The role of the FOMC is to administer US monetary policy, starting with interest rates, monetary stimulus, the amount of money in circulation, programs to buy or sell government stocks and bonds, to regulating employment issues. Everything will be discussed at every FOMC meeting or FOMC Meeting.
Basically, all decisions made by the FOMC will greatly impact global conditions. This is because the US itself often becomes a reference for other countries in the world when making various policies in these countries.
Get to know the FOMC Meeting
It should be noted that the FOMC will hold eight meetings (FOMC Meetings) per year. The FOMC Meeting is a regular activity that brings together members of the Federal FOMC Committee from the Fed to discuss US economic conditions and determine the country’s monetary policy.
Throughout this meeting, FOMC members will conduct analyses of various economic data, including inflation, unemployment rate, economic growth, and other indicators. They also consider external factors, including global economic conditions and geopolitics. From this analysis, they will decide whether a change in monetary policy is necessary or not.
On the other hand, investors are also paying close attention to the FOMC meeting. This is because decisions and statements announced by the FOMC can provide important clues regarding the direction of US monetary policy and have a direct impact on financial markets as a whole, including the crypto asset market.
Investors will observe the FOMC meeting due to several factors, including the fact that this meeting will affect interest rates, impact currency exchange rates, affect market sentiment, and also have the potential to influence the crypto asset market.
Regarding the impact on crypto assets, one example is loose monetary policy, which will Encourage investors to look for alternative assets, including crypto assets, as a protection against the potential for inflation and depreciation of traditional currencies.
FOMC meeting schedule for 2023
As mentioned earlier, the FOMC will hold regular meetings eight times per year. The schedule itself will usually be announced at the beginning of each year. However, more FOMC meetings can also be held if there is an urgent need.
In 2023, the eight FOMC meetings will be held on 31 January-1 February 2023, 21-22 March 2023, 2-3 May 2023, 13-14 June 2023, 25-26 July 2023, 19-20 September 2023, 31 October—November 1, 2023, and December 12—13, 2023, according to sources from the Federalreserve.gov website.
Please note that this FOMC meeting will not be held in public. This is because this meeting can only be witnessed on the Fed’s website. Because of this, many parties then speculated about the results of the FOMC and The Fed meetings, and whether later policy would be able to tighten the money supply based on increasing or decreasing interest rates.
As for several important decisions discussed at the FOMC meeting, one of them is related to the federal interest rate. In this case, the FOMC will determine whether interest rates need to be raised, lowered, or maintained. Then, the FOMC will also discuss the money supply (amount of money in circulation), policies on purchasing bonds and assets.
2 Term Impact of FOMC Decisions
Globally, the FOMC has indeed become one of the parties that influence the economy and the stock market. Regarding the impact of the FOMC decision, including on the crypto market, there are two terms of the results of the FOMC meeting decision that need to be known, including:
1. Hawkish
At the FOMC meeting, hawkish decisions are those that provide support for the need for tightening in the monetary sector, increasing interest rates, or reducing monetary stimulus. Generally, this decision will strengthen the value of the US dollar.
2. Dovish
Furthermore, there are dovish decisions, namely decisions that lead to monetary easing, lower interest rates, and an increase in monetary stimulus. Generally, the result of this dovish decision will weaken the position of the US dollar.
What Is the Effect of the FOMC on the Crypto Economy and Markets?
As economic institutions in a superpower like the US, the Fed and the FOMC certainly have an important global position. In this case, the institution can influence economic movements and stock markets around the world. Therefore, all decisions made by the Fed and the FOMC can have a negative or positive impact on the world economy.
Being part of the Fed, the FOMC is the party that makes a series of important decisions relating to interest rates and monetary policy in the US. Therefore, the results of the FOMC decision had a very big impact, even globally, including on the crypto market.
For example, if the outcome of the FOMC’s decision is hawkish, it will have a major impact on the economy and the stock market. In this decision, the FOMC will raise interest rates in the US. Automatically, many investors will be interested in investing in the US, and this will cause the stock market to experience an upward trend. For the economy, this has an effect on smoother international trade.
On the other hand, if the FOMC’s decision is dovish or makes the value of the US dollar weaken, it will also have a big impact on the stock market, which will then experience a decline.
In addition, the movement of international trade will also weaken due to the fall in the value of the US dollar. If investors can expect the result of the FOMC decision to be dovish, then there is a possibility that the value of the US dollar will not fall sharply. In this case, strengthening may occur as a result of profit-taking.
Conclusion
In conclusion, the policies adopted by the Federal Open Market Committee (FOMC) can have a significant impact on the crypto asset market, including increasing Bitcoin and altcoin prices. This happens because loose monetary policy can make investors look for alternative assets, including crypto assets, as protection against potential inflation and push prices up.
In addition, another impact is related to financial market volatility. Sudden changes in interest rates or monetary policy can create instability in the crypto asset market and cause significant price fluctuations.
In addition, the FOMC statement regarding the direction of monetary policy can also have an impact on overall investor sentiment. In this case, positive feelings toward looser policies could increase investor interest in risk assets, including crypto assets.
Furthermore, it is also worth remembering that before investing in the crypto asset market, it is important for investors to understand the complex relationship between monetary policy and the crypto market. Several things must be considered, including following the FOMC announcement, the need to carry out fundamental analysis, and the importance of diversification.
Besides that, before investing in the crypto market, it is also important for investors to always be careful and do research first. Ultimately, a good understanding of the relationship between monetary policy and the crypto asset market will help investors better anticipate and respond to market changes.
Are You Interested in Investing in Crypto Assets?
So, now you know what the FOMC is, the FOMC Meeting, the schedule, the terms of the impact of the decision, and its impact on the crypto economy and market.
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