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Crypto News: The US Fed’s Federal Open Market Committee (FOMC) delivered a 25 bps hike on expected lines, taking the current target rate from 450-475 bps to 475-500 bps. The central bank said indicators point to modest growth in spending and production. More importantly, the Fed said the U.S. banking system is sound and resilient.
The crypto market reacted in slightly bearish way in reaction to the FOMC decision, with Bitcoin price down by around 0.50%. The markets earlier feared that further hike in interest rates could make it even worse for banks although the macroeconomic scene demanded further tightening. US Federal Reserve Chair Jerome Powell said in his press conference speech said the US banking system was out of danger and that all user bank savings are safe. The Fed statement said,
“The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to raise the target range for the federal funds rate to 4-3/4 to 5 percent.”
The FOMC said some additional policy firming may be appropriate to be able to return inflation to the 2 percent target over time.
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Market Expectations
The US Federal Reserve‘s interest rate decision came amid much anticipation amid the ongoing bank crisis. The market largely anticipated an 85% probability of a 25 bps increase and a 15% probability of rates remaining unchanged. In the previous Fed meetings, Powell maintained in his speech that “ongoing increases in the target range will be appropriate.” He also maintained that the central bank was firm on its view to bring inflation back to the 2% target. Hence, Powell speech was expected highlight the central bank’s views on preventing further downside to the banking crisis.
Earlier, the US stock markets opened flat as traders awaited the interest rate decision. Whereas Bitcoin price reached its highest level of $28,700 since June 2022. In a latest, the BTC price dropped by 3% in reaction to Jerome Powell’s comments.
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