After a two-day Federal Open Market Committee (FOMC) meeting, the Federal Reserve has raised its benchmark interest rate by another 75 BPS.
The price of Bitcoin reacted erratically to the news, dropping by $1,000 moments after the announcement.
- The hike, revealed at 18:00 UST on Wednesday, raises the central bank’s new policy rate to between 3.0% and 3.5%.
- Most investors had expected a 75 basis point hike heading into the meeting, but markets were pricing in a roughly 15% chance of a percentage point rate hike.
- Just 1 minute after the announcement, Bitcoin fell from approximately $19,700 to $18,700. It has since recovered to around $18,946, at the time of writing.
- Volatility following a Federal Reserve decision is familiar territory for Bitcoin. The price fluctuated rapidly after Fed Chairman Jerome Powell’s speech in Jackson Hole last month, where he reiterated his commitment to address inflation.
- Lowering inflation has been the Fed’s policy theme for months as inflation has hit record highs throughout 2022. The August CPI stood at 8.3% last week, higher than analysts expected.
- The tightening of monetary policy has sent both stocks and cryptocurrencies plummeting over the course of the year. Bitcoin is now 70% below its November high of $69,000, while the NASDAQ it is down 28% year to date.
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