The US Federal Reserve (Fed) raised interest rates by 25 basis points today, marking the first rate hike in the US since before the COVID-19 pandemic. The increase was in line with what the central bank has long communicated to the market that it would do.
“[…] the Committee decided to raise the target range for the federal funds rate to 1/4 to 1/2 percent and anticipates that ongoing increases in the target range will be appropriate. In addition, the Committee expects to begin reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities at a coming meeting,” the Fed’s announcement said.
The price of bitcoin (BTC) dropped immediately following the announcement, trading down by 1.3% to USD 39,900 in the first five minutes after the release of the Fed’s statement. At the same time, the US S&P 500 stock index dropped 0.5%.
The Fed’s announcement also said that the implications of Russia’s invasion of Ukraine are “highly uncertain” for the US economy, but noted that it is “likely to create additional upward pressure on inflation.”
The Fed further signaled that it expects to raise rates six more times this year, and three more rate increases in 2023.