US Federal Reserve warns of even higher interest rates, what is Bitcoin doing?

The US Federal Reserve has been one of the most aggressive central banks when it comes to raising interest rates over the past year. This was a major cause of the major crash of stocks and crypto, among others.

The Fed’s policy rate is currently between 5.25% and 5.50%, the highest it has been in 17 years. For a while analysts thought the rate hikes were over, but on Friday the Fed warned this could be a miscalculation.

The Federal Reserve remains strict

On Friday, Federal Reserve Chairman Jerome Powell addressed the annual Jackson Hole conference on the state of the economy and inflation.

It is the Fed’s job to bring inflation back to the 2% target and we will make sure of that. We introduced a much stricter policy last year. Inflation then fell, but it is still too high. We stand ready to continue raising and (keeping interest rates high) until we are confident that inflation will remain around (our target of 2%) in the longer term.”

According to Powell. The director also stresses that inflation was caused by very high demand for products and the major disruptions in global supply chains caused by the corona pandemic. The Fed now seems to be slowly reaching its goal, but there is still no end in sight.

Powell emphasized that the key interest rate would only be raised further if this was appropriate to the situation. The Netherlands is already in recession, and some analysts believe that the US will eventually enter that recession as well.

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Bitcoin is not safe yet

Bitcoin (BTC) and many other cryptocurrencies initially reacted to the news with a slight drop. But now the Bitcoin price has climbed back to the price at the time the conference started.

So, for now, it seems that the crypto market is not quite sure how to interpret the news. On the one hand, there are signs that the Fed will hike rates even further and possibly even trigger a recession, on the other hand, some analysts believe that the next bull market has already begun.

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