Federal Reserve Raises Interest Rates Again, Crypto Market Mixed

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The US Federal Reserve again raised interest rates in an effort to curb inflation. The crypto market had a mixed reaction on the upside.

Interest rates hit 16-year highs after the central bank raised its benchmark rate by a quarter of a percent to 5.1%.

Fed hike takes rates to 16-year high

All major stock indexes fell shortly after the Fed announced the rate hike. Crypto, however, showed a mixed reaction. Over the past 24 hours, Bitcoin and Ethereum have gained 2% after a slight decline following the announcement. The other major altcoins remain muted on the hourly charts. The broader market appears largely unchanged after a brief pullback.

This decision is the result of persistently high inflation, which has slowed in recent months. US consumer inflation fell in March but remained at 5%. The year-over-year rate is significantly lower than the 6% seen in February.

Experts interpret the 25 basis point rise, which has taken interest rates to their highest level in 16 years, as a hint of a potential pause at the next meeting.

What’s next for the markets?

Some analysts had previously predicted that the Fed would pause its monetary policy tightening exercise amid a banking crisis. However, in a recent review by the Board of Governors of the Federal Reserve System, the failure of Silicon Valley Bank was blamed on “mismanagement.” Additionally, the review called the U.S. banking system “sound and resilient, with strong capital and liquidity.”

Federal Reserve Chairman Jerome Powell speaks after interest rate hike | CNBC

Federal Reserve Chairman Jerome Powell addressed the crisis at a news conference after interest rates rose. He said,

“The run on Silicon Valley Bank did not match the speed of runs throughout history. And that must now be reflected in some way in regulation and supervision.

However, economists fear that ten rate hikes in one year could cause the economy to slow down or even trigger a recession. U.S. regional banks could be exposed to systemic risks due to the increase, according to banker Uday Kotak of Kotak Mahindra Bank. A recent report points out that uninsured depositors at some 190 regional banks are still withdrawing money, putting the system under strain. This could be a possible reason why the crypto markets didn’t take the news too badly.

Meanwhile, the Hong Kong Monetary Authority (HKMA) also raised interest rates on Thursday.

Disclaimer

In accordance with the guidelines of the Trust Project, BeInCrypto is committed to providing impartial and transparent reports. This news article aims to provide accurate and timely information. However, readers are urged to independently fact-check and seek professional advice before making any decisions based on this content.

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