Fed resumes raising rates, crypto and equities stay flat
The move comes after the central bank paused interest rates in June, marking the first hold in 15 months
Federal Reserve Chair Jerome Powell | Brookings Institute/"Jerome Powell" (CC license)
The Federal Reserve opted to resume increasing interest rates Wednesday after a one-time pause in June.
Economic activity “has been expanding at a moderate pace,” the central bank wrote in its Federal Open Markets Committee statement, citing job gains and a sustained low unemployment rate. Plus, US banks have proven to be “sound and resilient,” the statement added.
The move comes after the central bank paused interest rates in June, marking the first hold in 15 months. There had been ten consecutive rate increase rounds prior to last month, a strategy the Fed hoped will curb the highest inflation the country has seen in more than four decades, but markets have fretted over whether a soft landing is achievable.
“In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments,” committee members wrote in the statement.
The committee also noted that the Fed will continue to lower its holdings of Treasury securities and mortgage-backed securities.
Bitcoin (BTC) and ether (ETH) rallied slightly on the news, with both raking in around a 0.3% gain. Equities were able to slightly pare back losses from earlier in the trading session.
The S&P 500 lost as much as 0.2% Wednesday morning before the Fed’s announcement. In the moments after the rate decision was revealed the index was able to inch back close to its intraday high.
The Nasdaq Composite similarly rebounded slightly, but still remains about 0.2% lower at time of publication.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your morning with the top news and analysis to inform your day in crypto.
- Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
- 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
- Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
- The Drop: For crypto collectors and traders, covering apps, games, memes and more.
- Supply Shock: Tracking Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.
