{"id":6967,"date":"2022-09-21T20:33:54","date_gmt":"2022-09-21T20:33:54","guid":{"rendered":"http:\/\/ci02abe2e890002539"},"modified":"2022-09-21T20:33:54","modified_gmt":"2022-09-21T20:33:54","slug":"fed-hikes-75-bps-again-to-curb-inflation","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/markets\/fed-hikes-75-bps-again-to-curb-inflation","title":{"rendered":"Fed Goes Big Again With 75 Basis Point Hike In Bid To Curb Inflation"},"content":{"rendered":"
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The Federal Open Markets Committee (FOMC) raised U.S. interest rates by 75 basis points on Wednesday, the third hike in a row of such a size as it wrestles with stubborn inflation levels.<\/p>\n

The market was pricing 82% probability of a 0.75% increase in rates ahead of the release of Fed\u2019s statement at 2 p.m. ET, according to CME\u2019s FedWatch tool. The odds of a historic 100bps increase, which hasn\u2019t happened since 1981, sat at 18%.<\/p>\n

Bitcoin touched $18,704 on Bitstamp within 5 minutes of the hike’s announcement, per TradingView data. The coin then shoot back up to $19,800 in minutes, but the movement didn’t last as it quickly reversed down. Bitcoin was exchanging hands below $19,000 at press time.<\/p>\n

Along with its statement<\/a> on interest rates, the FOMC also shared median projections<\/a> for the most likely outcomes for real GDP growth, unemployment rate and funds rate for this year and the following three.<\/p>\n

FOMC participants foresee GDP growth for 2022 to be slightly positive, at 0.2%, while they project the unemployment rate to hold below 4% at 3.8%. For 2023, however, unemployment is set to rise above that level to 4.4%, while GDP growth is expected to reach 1.2%. Median federal funds rate, on the other hand, is expected to be 4.4% this year and 4.6% in 2023. It would come down only the following year, to around 3.9%.<\/p>\n

The chairman of the FOMC and the Federal Reserve, Jerome Powell, joined a group of reporters for a live press conference<\/a> following the hike announcement. He commented on the committee\u2019s decision to increase rates by three-quarters of a percentage point and hinted at possible future actions in monetary policy.<\/p>\n

\u201cWe anticipate that ongoing increases [in interest rates] will be appropriate,\u201d Powell said in the press conference. \u201cThe pace of those increases will depend on incoming data\u2026but, at some point, it will become appropriate to slow the pace of increases.\u201d<\/p>\n

Despite hinting at eventually walking away from jumbo hikes such as the ones enacted in the past three meetings, Powell firmly believes that a tough stance will be necessary to curb down U.S. inflation before it becomes entrenched in the economy. He reiterated this position plenty of times throughout the press conference.<\/p>\n

\u201cWe will need to bring our funds rate to a restrictive level and keep it there for some time,\u201d he affirmed, adding that the FOMC wants to see economic growth below trend (1.8%) and a cooling off in the labor market.<\/p>\n

When asked what he meant with \u201crestrictive\u201d levels for the Fed\u2019s funds rate, Powell explained that \u201ctoday, we\u2019ve just moved to the lowest level of what might be restrictive.\u201d With today\u2019s 75bps hike, U.S. interest rates reached 3.25% \u2013\u2013 the highest it has been since 2008.<\/p>\n

Powell also clarified that chances of a \u201csoft landing\u201d \u2013\u2013 the action of raising interest rates just enough to curb inflation without causing a recession \u2013\u2013 are \u201clikely to diminish\u201d as the FOMC keeps hiking rates. He reiterated that the economy will need to slow down and unemployment to tick up for inflation to slow.<\/p>\n

\u201cYou want to be in a place where real rates are positive,\u201d Powell said.<\/p>\n

The chairman of the U.S. central bank reiterated that he believes inflation, despite having come down since its peak of 9.1%, is still \u201crunning too high.\u201d <\/p>\n

\u201cWe need to keep doing these large increases.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

The Federal Reserve hiked interest rates by three-quarters of a percentage point for the third consecutive time, sending Bitcoin below $19,000.<\/p>\n","protected":false},"author":2572,"featured_media":237,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[132,207,1315,1196,206,93],"class_list":{"0":"post-6967","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-bitcoin-price","9":"tag-federal-reserve","10":"tag-fomc","11":"tag-interest-rates","12":"tag-jerome-powell","13":"tag-news"},"author_data":{"id":2572,"name":"Namcios","nicename":"namcios","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/pfp-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/marriner_s_eccles_federal_reserve_board_building-scaled.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/6967","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/2572"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=6967"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/6967\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/237"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=6967"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=6967"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=6967"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}