FED Announces Its Much-Awaited Interest Rate Decision: Here’s Bitcoin’s First Reaction!

The Fed increased interest rates by 75 basis points. Expectations were 75 basis points.

Bitcoin’s initial reaction is as follows:

The Fed Was Already Expected to Increase Rates by 75 basis points

The Fed was expected to raise interest rates by 75 basis points on Wednesday, then signal it could reduce the size of rate hikes from December.

As markets prepare for their fourth straight 75 basis point gain, investors expect the Fed to slow its pace before ending its rate hike cycle in March. One basis point is equal to 0.01 percent of a percentage point.

Michael Gapen, chief US economist at Bank of America, said:

“We think they increased it just to get to the end point. We estimate they have increased it up to 75. We think that they have opened the door to a step back in interest rate hikes since December.”

Gapen said he expected Fed Chairman Jerome Powell to state at the press conference that the agency discussed slowing the rate of interest rate hikes, but was not committed to doing so. Gapen expects the Fed to raise interest rates by half a point in December.

Gapen continued his thoughts before the interest rate decision as follows:

“The November meeting is not really about November. It’s about December.”

Gapen expects the Fed to raise rates to 4.75% to 5% in the spring, which will be the final rate. An increase of 75 basis points on Wednesday will increase the interest rate range from zero to 0.25% in March to 3.75% to 4%.

The stock market had already risen on expectations of a slowdown in the agency’s rate hikes after a recent 75 basis point hike Wednesday afternoon.

With this bitcoin price was resisting just above $20,000 before the interest rate decision.

It has also been found that US crypto investors continue to buy Bitcoin lately. Despite various setbacks, US investors have accumulated more Bitcoin since July of this year than anywhere else.

*Not investment advice.