Bitcoin soars to intraday high as Fed leaves rates unchanged
The Fed has indicated that the first rate hike will take place in March
The price of Bitcoin, the leading cryptocurrency, spiked to an intraday high of $38,820 on the Bitstamp exchange after the US Federal Reserve announced Wednesday that it had left overnight interest rates unchanged.
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In the statement after the meeting, the Fed indicated that it could raise interest rates in mid-March, but there is no concrete timetable for that at the moment.
It was widely expected that the central bank would indicate that it would raise interest rates.
The Fed’s aggressive shift is seen as the biggest headwind for cryptocurrencies and stocks.
Earlier this week, Bitcoin plunged below $33,000 in a sell-off that analysts say was triggered by the unfavorable macro environment. Analysts believe crypto and other assets could take advantage of the central bank’s ultra-easy monetary policy to cushion the blow of the pandemic.
In March 2020, the Federal Reserve lowered its short-term benchmark to a range of 0%-0.25%.
The central bank is also expected to phase out its unprecedented bond-buying program in March. It has now been reduced to just $30 billion a week.
Fed Chair Jerome Powell expects Omicron cases to “decrease rapidly,” but he adds that the virus continues to cause “great hardship.”
Inflation remains “far above” the central bank’s target of 2%, according to Powell:
We understand that high inflation brings significant hardships.
When it comes to interest rate policy, Powell says no decision has been made so far, adding that Fed officials “will be guided by incoming data.”
The head of the Fed says there is “quite a bit of room” to raise rates without undermining the labor market.