The Federal Reserve (Fed) said it would raise short-term interest rates on loans by an additional 0.75% for the third year in a row. Many economists expected this increase, and financial markets have largely incorporated this calculation into their market cap calculations. As the market capitalization of cryptocurrency exchanges is hardly shaken, it seems that the same is true of the cryptocurrency market. At the time of this writing, the digital assets sector rose 0.17% to $925.79 billion, according to CoinMarketCap. However, the largest and most valuable cryptocurrency, Bitcoin, fell 1.02% per coin to $19,321. This is because the Fed's rate hikes have boosted bond yields by up to 4% and the US dollar has also risen, taking a toll on Bitcoin as a whole. What is the Fed trying to do? In August, inflation hit a better-than-expected 8.3% (yoy). It is the 15th month in a row that inflation has stayed in the mid-single digits. This level of sustained inflation has prompted the Fed to raise interest rates to slow the economy.
In the Fed's statement following its Federal Open Market Committee (FOMC) meeting today, while the central bank patted itself on the back for spurring job growth and low employment -- one of its primary remits as an organization -- it also admitted that it's having difficulties with its other responsibility of curbing inflation due to supply chain issues, price pressures, and higher costs for food and energy. "We are moving our policy stance purposefully to a level that will be sufficiently restrictive to return inflation to 2%," Fed Chair Jerome Powell said in a press conference immediately following the FOMC meeting. While Chair Powell did not expressly say how high rates could go before they're "sufficiently restrictive," he signaled during the press conference that further rate hikes can be expected from future FOMC meetings, the next of which is in November 2022.