The decision was in line with economists’ expectations that the Fed would increase interest rates by 75 basis points this month. Less than a week ago, the European Central Bank surprised investors by raising interest rates for the first time in 11 years, by 50 basis points.
According to CoinMarketCap, Bitcoin and Ethereum have surged by 8.51% and 15.54%, respectively, in the last 24 hours. Bitcoin climbed by 3% in the hour following the Fed’s statement, while ETH increased by 4.8%. However, they have both declined in the last seven days, and the total worth of all cryptocurrencies briefly fell below $1 trillion on Tuesday earlier this week.
The Fed’s move will raise its key rate, which affects many consumer and business loans, to a range of 2.25% to 2.5%, its highest level since 2018.
The central bank’s decision follows a jump in inflation to 9.1%, the fastest annual rate in 41 years, and reflects its strenuous efforts to slow price gains across the economy. By raising borrowing rates, the Fed makes it costlier to take out a mortgage or an auto or business loan. Consumers and businesses then presumably borrow and spend less, cooling the economy and slowing inflation.
Globally, central banks have been hiking interest rates in order to restore price stability and bring runaway inflation under control. In the United States, the Federal Reserve raised interest rates by the most since 1994 last month to counter rising prices, which are climbing at the highest rate in more than four decades.