On Wednesday, Federal Reserve raised interest rates again by 75 basis points to tame looming inflation without creating a recession.
As stated by Fed Chair Jerome Powell, “As the stance of monetary policy tightens further, it likely will become appropriate to slow the pace of increases while we assess how our cumulative policy adjustments are affecting the economy and inflation.”
As pointed out by the Fed Official, even though the job gains have been increasing and the unemployment rate has remained low, the Ukraine war and current supply chain issues have contributed to the higher rates.
In June also, Federal Reserve hiked the rate by 75 basis points, and Fed Chair Jerome indicated another such hike if current condition persists.
The fed funds usually affect the banks charging each other for short-term loans. However, it also affects consumer products like mortgages, auto loans and credit cards.
This rate is highest than the last one that happened in December 2018.
The statement issued after the rate hike stated, “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals.”
It also added, “The Committee’s assessments will take into account a wide range of information, including readings on public health, labour market conditions, inflation pressures and expectations, and financial and international developments.”
Crypto Market Reaction
The crypto market reacted positively to the Federal Reserve’s hiked rate news.
At the time of writing, Bitcoin (BTC) is up by 9.55%, and Ethereum is up by 14.35%, according to CoinMarketCap.
Additionally, all the other tokens have shown a positive sign in the last 24 hours.
Steven McClurg, co-founder and chief investment officer at digital asset fund manager Valkyrie Investments, states, “This 75 [basis point] rate hike was previously telegraphed and came as expected, further stoking fears of a slower, longer hike cycle rather than the quicker one preferred by many.”
However, another analyst said it is difficult to predict which way the markets will move beyond this point.
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