Last Minute: FED Announced Its Much Awaited Interest Rate Decision! Here’s Bitcoin’s First Reaction!

The Fed has finally shared its interest rate decision, which has been expected for weeks.

Fed rates 25 basis points increased. Expected 25 basis points.

#LAST MINUTE

The Fed increased rates by 25 basis points.

Expected 25 basis points. pic.twitter.com/gKMV388JNx

— Bitcoin System (@bitcoinsystem) May 3, 2023

After the interest rate decision Bitcoin (BTC) The initial reaction of the price is as follows:

U.S. interest rate futures are pricing in a pause at the June, July meeting.

FED: We will continue to shrink the balance sheet as planned. Employment growth is strong and inflation remains high. Tighter credit conditions are likely to put pressure on the economy, hiring and inflation.

FED announced that the decision was taken unanimously. FED repeated that our banking system is solid and resilient.

FED’s Interest Rate Decision Was Critical

In an environment of increasing concerns about inflation and economic slowdown, the FED announced its latest interest rate decision today.

The Fed has been steadily increasing interest rates since last year to keep inflation under control and prevent the economy from overheating. However, some analysts warn that the Fed may tighten too much and too quickly, increasing the risk of recession.

The Fed’s benchmark interest rate, which affects borrowing costs for consumers and businesses, ranged from 4.75% to 5%. Most economists had expected the Fed to raise the rate another quarter point to the 5% to 5.25% range. This was the Fed’s 10th straight rate hike and the highest since 2007.

The Fed’s rate hikes are in line with its dual purpose of maintaining price stability and maximum employment. The Fed is targeting an annual inflation rate of 2%, but inflation has been well above this level for months.

The Fed believes that much of the increase in inflation is temporary and is due to base effects from supply chain disruptions, pent-up demand and price drops from last year’s pandemic. FED expects inflation to follow a moderate course as these factors disappear and interest rate hikes take effect.

However, some economists argue that the Fed underestimates the persistence and breadth of inflationary pressures, especially in the services sector, which makes up about two-thirds of the economy.

*Not investment advice.