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The Federal Open Market Committee (FOMC) announced a 0.25% interest rate hike in the February meeting while the crypto market gave a bullish reaction. This came amid a similar market wide expectation of 25 bps rise, which marked a slowdown in rate hike at the back of a series of 75 bps rise in previous months. The announcement came at a time when the Fed officials are focused on reducing the inflation to 2% target. This means tightening screws for liquidity in the economy was on top priority.
The new rate hike takes the existing rate range of 4.25 to 4.50% to the range of 4.50 to 4.75%. It may be recalled that more than 99% of support was inclined for a rate hike outcome of 25 bps from the FOMC meeting. However, the central bank hinted that further increases are coming in upcoming months. ALso, inflation eased to an extent but still remains elevated.
Also Read: Cathie Wood Revises Her Bitcoin (BTC) Price Prediction For 2030
Fed Rate Hike Bullish For Crypto Market?
The crypto market showed high volatility in the hours leading to the Fed decision announcement. Also, the US Dollar Index (DXY) was in the red with a 0.31% drop compared to yesterday. As of writing, Bitcoin (BTC) price stands at $23,037, down 0.63% in the last 24 hours, according to CoinGape price tracker.
Also Read: Bitcoin (BTC) Reaction To Powell Speech, US Rate Hike Hardly Lasts Long; Here’s Why
On broader terms, the decision of 25 bps rise along market expectation not only signals bullish environment but also results in net positive outcome for potential investors. A slowdown in rate hike essentially means more liquidity in the economy and therefore more money available for investment. However, with rising inflation worries in the U.S., increasing costs of living must also be taken into consideration.
Fed Chair Jerome Powell is set to announce his remarks on the state of the economy in his press conference.
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