Bitcoin Unfazed as Fed Raises Rates for First Time Since 2018


Alex Dovbnya

The Federal Reserve raises interest rates for the first time in years

The Federal Reserve has decided to raise interest rates for the first time since 2018.

It followed the Bank of England by raising interest rates by 25 basis points in line with market expectations.

Bitcoin, the largest cryptocurrency, currently trades at $40,106 on the Bitstamp exchange. It has largely curbed its losses after initially submerging about 1.5% in the news.

Image by tradingview.com

Rising inflation puts the Fed under increasing pressure to keep consumer prices under control.

Risk assets, such as Bitcoin, were boosted by the unprecedented pandemic-era central bank stimulus program. However, the Fed is now aggressively cutting back its support to bring inflation under control.

Speaking at a news conference, Fed Chair Jerome Powell said the central bank would shrink its balance sheet at its upcoming Federal Open Market Committee (FOMC) meeting. The central bank has yet to decide on the timing.

According to Powell, the Fed is “attentive” to risks of further upward pressure on inflation.

The central bank plans to raise interest rates “steadily” through 2022, taking an ultra-hawkish stance in the process.

Powell added that inflation remained “well above” the Fed’s target, pointing to long-term supply disruptions.

According to the head of the Fed, the Fed will continue to adjust its policy to the changing economic environment.

The odds of a recession “are not particularly high,” Powell says.

The Fed believes the US economy is strong enough to “stand up to much tighter financial conditions”.

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