In a widely anticipated move, the Federal Reserve moved to bump interest rates by a quarter of a percentage point Wednesday, extending a series of what markets hope will be continued slower-paced increases.
The US central bank ongoing geopolitical tensions, persistent, although hopefully plateauing, inflation and a need to reach maximum employment as reasons for a repeat 25 basis point increase.
The move marks the Fed’s ninth consecutive rate increase, a strategy it hopes will curb the highest inflation the country has seen in more than four decades, but markets fret over whether a soft landing is achievable
“The Committee will closely monitor incoming information and assess the implications for monetary policy,” Federal Open Market Committee (FOMC) members wrote in a statement at the end of their two-day policy meeting Wednesday.
“The Committee anticipates that some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
Bitcoin and ether were mixed on the news, with bitcoin gaining more than 1%, extending its banking-crisis fueled run, and ether losing 1.1%.
The S&P 500 and Nasdaq Composite indexes rallied slightly after the decision, rising about 0.4% and 0.5%, respectively, likely because markets had predicted the rate increase.
Fed Chairman Jerome Powell may be feeling better about another rate increase because the KBW Bank Stock Index, which tracks the 24 largest firms in the US, has been relatively stable over the past few days, Noelle Acheson, author of Crypto is Macro Now and former head of market insights at Genesis, said.
“Some are interpreting this as greater reassurance that there won’t be ripple effects, but I disagree – the fact that the index is not going up could hint at a ‘wait and see’ stance, with ripple effects already priced in after the brutal drop so far this month,” Acheson said.
This is a developing story…
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Source: https://blockworks.co/news/federal-reserve-interest-rate-25-bps-march