The United States Federal Reserve announced another 75 basis point hike in interest rates at the Federal Open Market Committee (FOMC) meeting yesterday. The interest rate hike was well received by the cryptocurrency industry, with both Ethereum and Bitcoin Price increasing after the Fed’s announcement.
Bitcoin surpassed $23,000 and has increased by 5% in the last 24 hours, since the announcement. Just last month, the Bitcoin crash led to over $800M in liquidations.
With the latest interest rate hike, the U.S. interest rates are now between 2.25% and 2.5%, which is the highest level since the start of the COVID-19 pandemic.
“Inflation has obviously surprised to the upside over the past year and further surprises could be in store” said Federal Reserve Chair Jerome Powell at the press conference following the FOMC meeting.
Jerome Powell stated that it would “become appropriate to slow the pace of increases”. He also added that the Federal Reserve would consider “an even larger” hike if needed in the future.
The Federal Reserve made its decision after the U.S. Bureau of Labor Statistics revealed that the Consumer Price Index increased by 9.1% in June, reaching a 40-year high.
This happened despite the Fed’s months-long efforts to contain rising prices by raising interest rates.
The Fed could try to reduce the amount of money in circulation to combat inflation. It does this by increasing interest rates, which raises the cost of borrowing money.
Although it was rumored that the Federal Reserve might choose to raise rates by 100 basis points soon after the release of the June inflation data, the 75 basis point increase was widely anticipated.
The Federal Reserve is working to restrain inflation at a time when market uncertainty is pervasive and worries about a potential recession are growing.
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