Federal Reserve Hikes Rates by 25 Basis Points
Recent bank failures had market participants questioning if the U.S. central bank would follow through with its previous intention to further tighten monetary policy.
The U.S. Federal Reserve raised its benchmark fed funds rate by 25 basis points to a target range of 4.75%-5%, in line with most market participants' expectations.
The price of bitcoin (BTC) rose about $250 to $28,700 in the immediate aftermath of the decision.
In its statement accompanying the rate hike Wednesday afternoon, the Fed's Federal Open Market Committee (FOMC) acknowledged this month's bank system troubles, saying that "recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation."
Today's policy statement also removed the "ongoing increases" language that had been notable over the past months, suggesting any possible future rate hikes will be data dependent.
As recently as two weeks ago, interest rate traders were evenly split on whether the Fed would raise rates by 25 or 50 basis points. Struggles within the banking system since – including the failure of a number of lenders – had traders today roughly evenly split on whether the Fed would raise by 25 basis points or stand pat, with some participants even expecting a surprise rate cut from the central bank.
The quarterly expectations of Fed members shows the median anticipated terminal fed funds rate remains at 5.1%. Participants see December 2023 core PCE inflation at 3.6% versus 3.5% expected three months earlier.
Fed Chair Jerome Powell will hold a press conference at 2:30 p.m. ET.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.