The Federal Reserve has indicated that it still plans to raise interest rates from March.
Not much has actually changed
The Federal Reserve announced yesterday that interest rates will remain at 0% for now. However, the first rate hike of this year is scheduled for March.
The press release coincided with a spike in Bitcoin’s price. It rose from $37,800 to $39,200 in the span of 20 minutes. But as quickly as the price rose, it also fell back to its old price.
The Federal Reserve’s announcement hasn’t really changed anything at all.
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Reducing Inflation
The Federal Open Market Committee meeting largely echoed what analysts have suggested in recent months. They want to reduce inflation, which reached 7% in December, to a target of 2%. Employment must remain high. For this reason, the Fed will raise its interest rates by as much as 0.25% per quarter.
The federal funds rate is the rate at which banks can borrow money from each other’s reserves overnight. Raising interest rates has a knock-on effect on the entire economy. The increases are contributing to rising credit card rates and mortgage costs for consumers, who are likely to have less investment in stocks or crypto currencies by 2022.
The committee also stated that it would end asset purchases in March. As a result, the money supply in the US increased.
Unlike crypto markets, stock markets bounced back into negative territory after the news. Given the up-and-down week on Wall Street, it’s unclear if they’ll stay there.