Bitcoin surpasses $40,000 as the Fed raises interest rates

BTC, the Nasdaq, and the S&P 500 have all reacted positively to the Fed's stance, which was expected.

The Federal Reserve hiked interest rates for the first time since 2018 in an effort to start reducing inflationary pressures caused by supply and demand imbalances and rising energy prices.

According to a statement issued Wednesday by the Federal Open Markets Committee, the US central bank raised its target range for the federal funds rate by 0.25 basis points and anticipates further, continued increases in future sessions (FOMC).

The group convened over the previous two days to explore options the Fed could use to bring inflation back within its 2 percent target range, as the index has been much above that objective for more than a year, reaching 40-year highs.

In addition to hiking interest rates, the Fed will begin lowering its balance sheet, with detailed measures for reducing asset holdings to be announced at the next meeting, according to Fed Chair Jerome Powell in a news conference following the release of the FOMC statement.

Powell stated that the committee believes the US economy would be able to sustain less accommodative monetary policy because it is currently "extremely strong." However, the chairman emphasized how the ongoing Russian-Ukrainian conflict could lead to even higher inflationary prices in the short future.

"We expect inflation to return to 2%...but it will take longer than originally anticipated," Powell said. "No one can predict where the economy will be a year or more from now."

Powell noted that, in his opinion, the United States is unlikely to suffer a financial depression because FOMC members continue to forecast growth and low unemployment rates.

Bitcoin surpassed $40,000 after the Federal Reserve declared that it would raise interest rates and reduce its balance sheet. For nearly a month, the peer-to-peer currency had been consolidating below that level, with brief increases on the daily chart. It is unknown whether the level will be maintained.

In addition to Bitcoin, the Nasdaq and S&P 500 indices have gone green, with gains of more than 2% at press time. While assets seen as riskier by investors, such as growth stocks and bitcoin, tend to suffer when monetary policies tighten, the FOMC statement was in line with expectations, allaying fears that a more aggressive set of policies would be announced instead.

** Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of USA GAG nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

Follow us on Google News

Filed under

Recent Search