On March 22, at 2:30 PM, the US Federal Reserve (Fed) announced a 0.25% increase in interest rates, as predicted by many analysts. However, the agency admitted that a banking crisis could cause them to halt the interest rate hike campaign earlier than planned.
As reported by AZCoin News, the decision on March 22 marked the 9th consecutive interest rate hike by the Fed to combat inflation in the country. The interest rate rose from 4.75% to 5%, the highest level since September 2007.
Following the Fed’s announcement of the 0.25% increase, the price of Bitcoin surged to a high of $28,866 before dropping over 7% to $26,601 after statements by Fed Chairman Powell. It is currently trading at $27,400. Bitcoin has benefited greatly from the current macroeconomic instability, rising up to 35% since mid-March and setting new highs for 2023.
The crypto market also recorded nearly $249 million in derivatives liquidation value in the hours before and after the Fed’s interest rate hike decision, with over half of it coming from Bitcoin, reaching $124 million. The rate of long orders being burned was 82%.
After the FOMC meeting, officials revealed that the interest rate hike process may be closed soon. In the previous 8 hikes, the Fed always emphasized that “continuous interest rate hikes are reasonable.” According to the Wall Street Journal, this meeting’s minutes were without the phrase, indicating a significant change in the agency’s view on economic policies.
The statement said it was too early to determine whether the banking system’s tensions would restrain the economy. Fed Chairman Jerome Powell affirmed that the US banking system is still healthy and flexible.
“Recent events may tighten the credit conditions of households and businesses, as well as affect economic activity, employment, and inflation. But we cannot be certain about the extent of these impacts,” the Fed shared.
All 11 voters in the FOMC agreed with this decision. New predictions show that 17 of the 18 officials participating in the meeting expect the Federal Reserve interest rate to increase to at least 5.1% and maintain at that level until December. Quarterly forecasts were little changed from those released in December.
Powell said officials had considered keeping the current interest rate but then decided to raise it by 0.25% due to persistently high inflation and unstable economic activity. In the meeting, the Fed chairman announced that he would not cut interest rates this year. Powell stated that the Fed would continue to monitor inflation and other economic indicators to adjust interest rates accordingly.
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This article was republished from azcoinnews.com