Federal Reserve Raises Rates Again By 0.25%, Bitcoin Trades Flat

The Federal Reserve rose its target interest rate by 25 basis points on Wednesday, in line with market expectations.

This brings the central bank’s rate to over 5.25% – one of its highest levels since the lead-up to the 2008 financial crisis.

• The latest hike marks the Federal Reserve’s 11th rate hike over its last 12 policy meetings dating back to March 2022.
• The central bank’s mission over the past year has been to quell once rampant inflation, which peaked at 9.1% in June 2022. The latest CPI figures showed that the central bank has been successful thus far, bringing inflation back down to 3% as of last month.
• That said, PCE inflation – one of the Fed’s preferred metrics for rising prices – has proven more difficult to address. This casts doubt on whether the Fed is ready to cease hiking rates, or is planning more to come.

• “The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments,” wrote the Federal Reserve in a Wednesday statement.

• The central bank said that inflation remains elevated, and unemployment is low, but that tighter credit conditions are likely to affect businesses and households. “The extent of these effects remains uncertain,” it said.
• A 5.25% target rate hasn’t been seen since 2007, with higher rates than that last used in the early 2000s.
• While rate hikes pummeled markets last year and have continued in 2023, both stocks and crypto are up substantially year to date. The former has surged on the hype surrounding artificial intelligence, Bitcoin has benefitted from both bank failures and excitement around a potential U.S. Bitcoin spot ETF.
• Bitcoin remained unaffected after Wednesday’s announcement, continuing to trade for roughly $29,300.