Fed Rate Hikes will Affect Crypto Market

The Federal Reserve is once again making a big change in the financial markets. The Federal Open Market Committee recently issued a decision about the benchmark interest rates. The announcement entails that the Fed is going to add a 0.25% increase in the fund rates by the central bank. For the consumers, it means that the current rate range for the quarter set at 0% to 0.25% will become 0.25% to 0.5%.

It is worth mentioning that the benchmark rates have been increased for the first time since December 2018 by the Federal Reserve. In a public statement, a Fed spokesperson claims that at the time, the inflation rates were high, and trade activities have slowed down on account of the COVID pandemic. Furthermore, the fed also pointed out the increasing oil prices in the region. Fed also claimed that in the coming days, the geopolitical situation is likely to create more pressure on the US economy.

The issuance of the CPI index by the Labor Department projected a 7.9% inflation increase and created havoc among the consumers. However, some economists fear that the inflation rates are still far from maturing for the season. The projection can mean that events like hyperinflation might be in the cards for the United States. Meanwhile, the Department of Labor also projected that the producer price index (PPI) rose by 10% in the same period.

Thus far, the projections by the US state departments have proved to encourage more investment interest in the digital asset market. Furthermore, the top currency, Bitcoin, has proceeded to gain a price push from the recent developments. Bob Iaccino is the CSO at Path Trading Partners. Speaking of the matter, he claimed that the fed have started to move towards quantitative tightening rather than easing.

Wall Street and CME Analysts

Wall Street analysts agree that there will be a 25-point hike for basis point rates until next year. On the other hand, the CME FederalWatch Tool projected that the investors are divided evenly between 25 or 50 points rates hike, and some even predict a small percentage like 1%.

Iccanio claimed that Federal Reserve chairperson Jerome Powell seems to be committed that the country should make changes to control the rising inflation rates. To this end, the fed have also shared a dot plot as part of its quarterly economic prediction chart sheet.