US Federal Reserve Raises Interest Rates as Expected; 25 bps
Summary: The US Federal Reserve's FOMC raised interest rates by 25 basis points, reaching their highest level in nearly 22 years. The Fed has acknowledged strong job increases and low unemployment rates, but also emphasized high inflation. The price of Bitcoin initially fell in response to the announcement, but recovered. The FOMC has signaled two more rate increases this year.
The FOMC of the US Federal Reserve raised interest rates by 25 basis points (bps) on Wednesday, as expected by the market. This brought them to their highest level in almost 22 years. This shifts the target rate aim to between 525 and 550 basis points.
The Fed has taken notice of the strong job increases in recent months and the low unemployment rate, but they have also highlighted the persistently high inflation. While this was happening, the price of Bitcoin first fell in response to the FOMC rate rise announcement before recovering.
Two More Hike This Year
Fed officials have been signaling the prospect of two more rate rises this year in recent speeches. After hitting their highest level since 2001, interest rates may be increased again in 2023.
The FOMC restated its commitment to max employment and inflation targeting 2% over the medium to long term. If the Fed’s decision to suspend rate hikes takes effect at the next meeting, economists expect to see the first rate drop at the January 2024 FOMC meeting.
Meanwhile, the crypto market is anticipated to grow more positive about the Bitcoin halving around April 2024, which might lead to record highs for the Bitcoin Price (BTC) this year. The price of bitcoin has scarcely moved in the 24 hours leading up to the Fed meeting. Although this development follows generally anticipated patterns, its impact on the cryptocurrency market remains to be seen.
In addition, US Fed Chair Jerome Powell will hold a news conference after the meeting to discuss the FOMC’s stance, which is much anticipated.
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