Federal Reserve Hikes Rates by 25 Basis Points

Recent bank failures had market participants questioning if the U.S. central bank would follow through with its previous intention to further tighten monetary policy.

AccessTimeIconMar 22, 2023 at 6:05 p.m. UTC
Updated May 9, 2023 at 4:11 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Federal Reserve raised its benchmark fed funds rate by 25 basis points to a target range of 4.75%-5%, in line with most market participants' expectations.

The price of bitcoin (BTC) rose about $250 to $28,700 in the immediate aftermath of the decision.

In its statement accompanying the rate hike Wednesday afternoon, the Fed's Federal Open Market Committee (FOMC) acknowledged this month's bank system troubles, saying that "recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring and inflation."

Today's policy statement also removed the "ongoing increases" language that had been notable over the past months, suggesting any possible future rate hikes will be data dependent.

As recently as two weeks ago, interest rate traders were evenly split on whether the Fed would raise rates by 25 or 50 basis points. Struggles within the banking system since – including the failure of a number of lenders – had traders today roughly evenly split on whether the Fed would raise by 25 basis points or stand pat, with some participants even expecting a surprise rate cut from the central bank.

The quarterly expectations of Fed members shows the median anticipated terminal fed funds rate remains at 5.1%. Participants see December 2023 core PCE inflation at 3.6% versus 3.5% expected three months earlier.

Fed Chair Jerome Powell will hold a press conference at 2:30 p.m. ET.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Stephen  Alpher

Stephen Alpher is CoinDesk's managing editor for Markets. He holds BTC above CoinDesk’s disclosure threshold of $1,000.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.