The Federal Reserve announced its latest rate hike in response to inflation on Wednesday. The Fed’s interest rate hiked to a target of 4.5%. Surprisingly, the Federal Reserve’s forecasts for the duration and value of interest rates could be higher. Than expected. Almost all board members estimate an interest rate of just over 5% in the fourth quarter is appropriate for the coming year.
The S&P 500 closed -0.61% for the day. Bitcoin closed unchanged but plunged as much as 1% during the Asian session. Bitcoin appeared to recover for a moment on Wednesday. It surpassed $18,000 for the first time since FTX collapsed a month earlier.
After the Federal Reserve announced a rise in interest rates, the bitcoin price dropped to around $17,800. The current price of one bitcoin is $17,700.
Fed believes in max pain for max gain.
At a press briefing on Wednesday, Federal Reserve Chair Jerome Powell explained the Fed’s philosophy behind its forecasts. The Fed is unconvinced that inflation will fall as expected despite a lower-than-expected consumer price index (CPI). Read this week. The Federal Reserve needs consistently lower inflation readings to ensure inflation abates. Their inflation target is 2%, but the Federal Reserve projects inflation to be above 3% next year.
It should tighten monetary policy as much as possible to reduce inflationary pressures as quickly as possible. According to Powell, failure to act quickly would result in higher inflation and prolonged economic decline. Taking medicine today would help us get well faster.
The Federal Reserve’s next meeting is in February, when inflation may have fallen enough to cast its outlook dovish. If inflation doesn’t come down, we may be stuck in a higher interest rate environment for longer. So far, Ethereum has held up very firmly in this bear market, unlike many other tokens. The cryptocurrency industry has a long list of issues that need to be addressed apart from other financial markets. The cryptocurrency markets may continue to drop by the end of the year.