Bitcoin Pares Gains as Fed Announces Another Big Rate Hike
Following the most recent increase, the federal fund rate is now in the range of 4.25%-4.5%, the highest since 2007.
The central bank signaled that it would keep lifting interest rates in 2023 in order to bring down inflation. The median dot from the Fed points to a 5.1% median terminal rate, which is higher than what the market was pricing in.
The price of Bitcoin has dropped by more than 3% on the news as the central bank continues to maintain its hawkish outlook. Earlier today, the largest cryptocurrency surged to $18,373, the highest level since Nov. 9 on the Bitstamp exchange.
All three major stock market indices also turned negative, with the S&P 500 dipping by 0.5%. As reported by U.Today, risk assets rallied earlier this week due to cooler-than-expected consumer price index (CPI) data. Federal Reserve Chairman Jerome Powell called it "a welcome reduction" in the pace of inflation.
Inflation is still far away from the Fed's target of 2%, which likely means that the central bank will not pivot to a more dovish monetary policy. Powell says that the full effects of tightening are yet to be felt, but stressed that the central bank had more work to do. He added that it was important to move quickly on interest rates earlier in 2022.