- The Federal Reserve announced a 75 basis points hike in key interest rates for the third time this year, increasing the federal fund rate to 3% - 3.25%.
- Following the announcement, US stock markets erased gains observed since the opening bell.
- The larger impact is yet to be seen on the crypto market as, following historical instances, the likes of Bitcoin and Ethereum are expected to test lower lows.
Following weeks of anticipation, the Federal Reserve once again raised the key interest rates on Wednesday by 75 basis points. The impact of this hike was no different than what was expected out of the markets, as the US stock markets dipped into the red after the decision. The crypto market, however, did not react as terribly.
Fed repeats history, again
For the third time this year, the Federal Reserve has decided to raise the interest rates of this magnitude. The Federal Open Market Committee (FOMC) has set a target of achieving inflation at the rate of 2% in the long run. For the same reason, the range of the fund rate has risen to 3% to 3.25%, making it the highest in almost 15 years.
However, this will not be the end of it, as the Fed's economic projections show that the central bankers expect the policy rate to reach 4.4% by the end of this year and 4.6% by the end of next year.
The statement released following the interest rate hike reads,
"The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals."
Following the hike, the US stock markets reversed earlier gains and turned negative. The Dow Jones, the NASDAQ and the S&P500 indexes were shedding 1.73%, 1.45% and 1.75%, respectively, on the day.
Crypto market to take the heat?
Given Bitcoin's rising correlation with the stock markets, some fall in price was expected out of BTC and the crypto market post the Fed hike. However, despite BTC hitting intraday lows of $18,700, the candles are still keeping green. Although trading at $18,967, BTC is dangerously close to the 3-month-old critical support level of $18,600.
Bitcoin 24-hour price chart
Ethereum has remained mostly unmoved, trading at $1,322. Should by the end of the day Fed's announcement sink in, both BTC and ETH could trigger a dip in prices.
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