Federal Reserve Interest Rates Hike by 0.75% Dampen Bitcoin Recovery Further

• For the economy to go forward, Powell said that inflation has to level off.
• Michael Saylor has justified the company’s choice to invest in Bitcoin.

With an increase of 0.75 percent, the Federal Reserve raised interest rates to their highest level since 1994. The move to raise interest rates was followed by a burst of inflation to relieve pressure on people’s economic development and financial status. It was the highest rate recorded in the previous three decades.

The Federal Reserve has shown that it is willing to take action as inflation continues to rise. According to some officials, the Federal Reserve is expected to conclude the year with an interest rate of 3.4%. In March, forecasters predicted that rates would conclude the year at 2.5 percent.

Trying to Keep Recession at Bay

For the economy to go forward, Powell said that inflation has to level off. Future rate increases were suggested by the dot plot by officials, who predicted a more aggressive stance on raising interest rates. As a result, the government has lowered its 2022 GDP growth prediction to 1.7% from 2.8% in March. According to the latest economic forecasts, inflation is predicted to fall to 2.6 percent in 2023. The Fed’s current strategy is to keep the economy from recession.

When the news was made, Bitcoin was still over the $20,000 psychological barrier — and the savage sell-offs earlier in the day were tied to nervousness about what would be said.

MicroStrategy CEO Michael Saylor has justified the company’s choice to invest a large portion of its cash in Bitcoin. Fears over the $205 million loan the business intelligence company has with Silvergate Bank, backed by BTC, have been allayed. For now, Bitcoin’s short-term future remains uncertain, as some analysts believe that the Federal Reserve’s interest rate rises are a major hurdle to its bright prognosis.