Fed Announces 25bps Rate Hike to 5%, Bitcoin Remains Flat
The Federal Reserve announced another small increase to its benchmark rate on Wednesday, bringing it between 5% and 5.25%.
Bitcoin’s price remained relatively flat on the announcement, fluctuating between $28,000 and $28,500.
The increase was largely in line with expectations, with the market only pricing in an 11.8% chance that the Federal Open Markets Committee (FOMC) would keep its rate flat, per the CME FedWatch tool.
The central bank has been increasing its interest rate since last year in an effort to quell red-hot consumer price index inflation, which rose to a 40+ year high of 9.1% last June.
Financial commentators like BitMEX co-founder Arthur Hayes predicted that the Fed might stop raising rates, and even begin lowering them far sooner than expected after multiple bank failures took place before the previous rate hike in May.
Others such as Former Richmond Fed Chief Jeffrey Lacker assumed that the Fed would remain firm in hiking rates in the face of bank failures, rather than signal to markets that something is amiss.
As of March 2023, inflation has been reduced to 5% – though some believe this may not last due to the Federal Reserve’s efforts to protect the banking system, which have already injected hundreds of billions of dollars back into the economy.
“The U.S. banking system is sound and resilient,” stated the Fed in a press release accompanying its rate hike announcement. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”
The central bank added that it would adjust its monetary policy stance “if risks emerge that could impede the attainment of the Committee’s goals.”
Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.