In a decision that was largely anticipated by market participants, including Bitcoin (BTC) dealers, the Federal Reserve on Wednesday increased interest rates by 75 basis points (0.75 percentage point) to a range of 3.75 to 4 percent.
Despite previous statements by central bankers suggesting otherwise, this is the fourth time in a row that the Fed has increased rates by three-quarters of a percent. For instance, San Francisco Federal Reserve President Mary Daly cautioned last month that if interest rates were hiked too quickly, the economy might experience a “unforced slowdown.”
Impact On Crypto Market
Bitcoin on the other hand increased by 1.3%, and traders are now anticipating additional hints about the future direction at Fed Chair Jerome Powell’s press conference at 2:30 PM ET.
Inflation On The Rise
The Fed typically increases rates in quarter-point steps. But after making a mistake in underestimating inflation last year by saying it was probably temporary, Powell has led the Fed to rapidly boost rates in an effort to reduce borrowing & spending and lower price pressures.
According to Nick Hotz, vice president of research at Arca, “Inflation continues to be sticky and high so rate hikes will continue, but the pace of hiking is set to slow” & “Any sign of the Fed easing up would be taken as very bullish short-term for digital assets”
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Slow Rate Hikes Incoming
The Federal Reserve’s policy committee also signaled that it would begin to slow down the size of its rate hikes from the next meeting onwards which could be in December.
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