Bitcoin and the rest of the crypto market have held steady following the Federal Reserve’s announcement today that the central bank has hiked its benchmark interest rates by 25 basis points, bringing them to their highest level since 2001.
The U.S. Federal Reserve is pushing on its war against inflation.
The central bank announced today during the Federal Open Market Committee that it would be raising federal interest rates by a quarter of a percentage point.
The move, which aligned with market expectations, raises rates to a range of 5.25%-5.50%. This is the highest the federal funds rate has been in 22 years. In so doing, the bank increases the cost of borrowing, which strengthens the dollar’s value.
Today’s rate hike is a resumption of tightener monetary conditions by the Federal Reserve, which at its last meeting in June had halted what had then been a 15-month cycle of successive rate hikes.
Rate Hike Offers Bitcoin Bulls Little Fuel
Bitcoin, the world’s largest cryptocurrency by market value, was at the time of writing trading for $29,512 — a 0.9% increase over the past 24 hours, according to CoinGecko data. It’s now down 57.09% from its all-time high of $69,044.
Ether, the second biggest crypto asset, was up 0.7% over the same timeframe, trading hands for $1,882.87. ETH is down 61.38% from its peak of $4,878, while many other altcoins have fared much worse over the past year.
At his post-meeting press conference, Fed Chair Jerome Powell revealed that the central bank was still committed to bringing down inflation — which currently hovers at 3% — to 2%. Notably, inflation in the U.S. stood at over 9% a year ago.
“We’ve covered a lot of ground, and the full effects of our tightening are yet to be felt,” Powell noted. “Inflation remains well above our longer-run goal of 2%.”
Chair Powell further indicated no decisions regarding the pace of future rate hikes or pauses had been made. He added that the Federal Open Market Committee (FOMC) would “assess the need for further tightening” on a “meeting by meeting” basis and further said he doesn’t expect inflation to drop to 2% until 2025.