BlockNews.com
  • Crypto
  • NFT
  • Metaverse
  • DeFi
  • Business
  • Technology
  • Opinion
  • Guides
No Result
View All Result
SUBSCRIBE
BlockNews.com
  • Crypto
  • NFT
  • Metaverse
  • DeFi
  • Business
  • Technology
  • Opinion
  • Guides
No Result
View All Result
BlockNews.com
No Result
View All Result
Home Crypto

Federal Reserve Fights-Off Inflation With Subsequent Rate Hikes. What Does It Mean For Crypto?

BlockNews Team by BlockNews Team
November 8, 2022
in Crypto, Finance, Politics
Reading Time: 4 mins read
A A
Federal-Reserve-Building
1
SHARES
14
VIEWS
Share on TwitterShare on Reddit

On Wednesday, the Federal Reserve announced another massive 75 basis point (bp) increase in the federal funds rate (FFR) as part of its continuing efforts to suppress inflation. This meant raising interest rates by three-quarters of a point to a target range of 3.75 to 4%.

You might also like

Around The Block – MAR 17 Week in News

Cassava Network, An African Web3 Platform, Has Partnered With Non-Custodial Wallet To Widen Crypto Reach In Africa

UAE Announces Free Zone for Digital and Virtual Asset Firms

The interest rate hike comes long before the Federal Open Market Committee (FOMC) meeting. The Fed believes the Russo-Ukrainian war is causing much hardship from human and economic perspectives. The situation also drives increased pressure on inflation and affects global economic activity. 

In a statement citing the committee’s attentiveness to inflation risk, the FOMC said:

“Job growth has been significant in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting the imbalance of supply and demand associated with the pandemic, higher food and energy prices, and broader price pressures.”

Following the Fed’s 75 bp announcement, the price of stocks leaped, as Bitcoin’s (BTC) price went up by 1% one-hour post-announcement. Gold and silver also reacted to the announcement with 0.98% and 1.58% price surges in gold per troy ounce for gold and silver, respectively. 

In his subsequent speech, Jerome Powell articulated the necessity for increasing rates and stringent monetary policy, citing the need to combat the country’s ‘red-hot inflation.’ On several instances, the chair has said that the Federal Reserve is striving to achieve the 2% inflation rate, calling it an important goal for the central bank.  

When journalists asked Powell whether the Fed would change course by December, the Fed chair said:

“The slowdown in restrictive measures is approaching and could happen at the upcoming meeting or the next.”

The Fed chair also said that Americans could expect more rate increases, though possibly not equal to the magnitude of previous ones. He also explained the uncertainty surrounding the level of interest rates, saying:

“…Even so, we still have some ways to go, and incoming data since our last meeting suggests that the ultimate level of interest rates will be higher than previously expected.”

Industry pundits and market analysts think all the good reports about job increases and rising order rates in the economy are a false narrative to serve as a strategy for the November 8 elections. 

“Jerome Powell can talk as much as he wants about the increase in the confidence index, the victory over the recession, and make other hard-to-believe conclusions; the market will not be deceived.”

Inflation remains in acceleration mode, despite a revised calculating method. The current 8.2% discourages any speculation that all indicators will collapse post-election. It is a widespread belief that inflation will cross the double-digit threshold even as state reserves of oil and diesel fuel approach complete exhaustion. 

Resultantly, some experts support the Fed’s move to raise interest rates despite its effect of causing more unemployment. The dual authority of the Federal Reserve holds that it must balance inflation and employment. 

In his Washington Post column, former U.S. Treasury Secretary Larry Summers invited Fed Chair Jerome Powell to ‘maintain an aggressive stance on rate hikes, even if it causes job losses in the short term. 

What This Means For Crypto

The growth experienced by stocks, precious metals, and Bitcoin following the FOMC statement began to slow down right after Powell’s press conference was over, with all four major stock indexes going down and BTC recording up to -1%.

Vigorous rate hikes are detrimental to crypto prices, and market pundits speculate that price volatility will continue in the short term. The Federal Reserve strives to stabilize the economy and inflation through rate hikes. Nonetheless, as a consequence is expected to end price increases, and a slowing economy negatively affects corporate earnings and market sentiment. 

The negative sentiment goes past Wall Street to influence the crypto market. This comes as industry players become more risk-averse in response to a deteriorating economy. Interest rate hikes are progressively suppressing the U.S. economy, which has already suffered two consecutive quarters of poor GDP this year and is on the brink of a recession. If the stock market topples over following the latest rate hike, the crypto market will also fall. 

Considering how quickly interest rates have been climbing in 2022, a key concern is how high they will go. Given that the crypto economy relies on solid fundamentals in the long term, investors may use this as the opportune time to acquire select high-quality investments at low costs. Historically, those who dive deep into the market during such turbulent times when market sentiment hits the bottom end up being the biggest winners in the bull market. 

Tags: cryptoFederal Reservemarket research
TweetShareShare

Recommended For You

Around The Block – MAR 17 Week in News

by BlockNews Team
March 17, 2023
0
Around the Block

Introduction In this recap of the crypto world, we will explore the events and news that had the most significant impact in the past week of March 13....

Read more

Cassava Network, An African Web3 Platform, Has Partnered With Non-Custodial Wallet To Widen Crypto Reach In Africa

by BlockNews Team
March 17, 2023
0
Africa web3

Cassava Network's v3 aims to build a bridge between Web2 African users and the Web3 space. Cassava Network partners with UniPass, a non-custodial wallet to onboard more African...

Read more

UAE Announces Free Zone for Digital and Virtual Asset Firms

by BlockNews Team
March 17, 2023
0
RAK DAO UAE

Emirate Ras Al Khaimah will launch a free zone for companies in the digital and virtual crypto sectors The RAK Digital Assets Oasis platform is made for the...

Read more

California Governor Failed to Disclose Personal Ties to Silicon Valley Bank $SIVB While Lobbying for a Bailout

by BlockNews Team
March 17, 2023
0
california governor

Governor Gavin Newsom of California hid his personal connections to Silicon Valley Bank from the general public as he advocated for the bank’s rescue with the White House...

Read more

Fidelity Crypto Opens to the Public: A Game-Changer in Commission-Free Crypto Trading

by BlockNews Team
March 17, 2023
0
fidelity building

Fidelity Digital Assets has opened its Fidelity Crypto platform to the public, offering commission-free trading of bitcoin and ether to more than 37 million retail users. Fidelity Crypto...

Read more
Next Post
FTX-App-with-Logo

FTX Temporarily Halts Withdrawals, On-Chain Data Reveals

Related News

us senate

US Senate Banking Committee to Hold ‘Crypto Crash’ Hearing This Month

February 8, 2023
axie infinity

Norwegian police recover $5.8M crypto from massive Axie Infinity Hack

February 22, 2023
Move Over FICO; Here Comes NFCS, The Non-Fungible Credit Score

Move Over FICO; Here Comes NFCS, The Non-Fungible Credit Score

June 28, 2022

Browse by Category

  • Breaking News
  • Business
  • Crypto
  • DeFi
  • Finance
  • Gaming
  • Guides
  • Investing
  • Media
  • Metaverse
  • NFT
  • Opinion
  • Politics
  • Social
  • Technology
  • Uncategorized
BlockNews.com

BlockNews.com brings you the most important Crypto and NFT news in the space.

CATEGORIES

  • Breaking News
  • Business
  • Crypto
  • DeFi
  • Finance
  • Gaming
  • Guides
  • Investing
  • Media
  • Metaverse
  • NFT
  • Opinion
  • Politics
  • Social
  • Technology
  • Uncategorized

RECENT POSTS

  • Around The Block – MAR 17 Week in News March 17, 2023
  • Cassava Network, An African Web3 Platform, Has Partnered With Non-Custodial Wallet To Widen Crypto Reach In Africa March 17, 2023
  • UAE Announces Free Zone for Digital and Virtual Asset Firms March 17, 2023

© 2022 BlockNews.com - Crypto and NFT news website by JRNY Club.

No Result
View All Result
  • Home
  • Crypto
  • NFT
  • Metaverse
  • DeFi
  • Business
  • Technology
  • Opinion
  • Guides

© 2022 BlockNews.com - Crypto and NFT news website by JRNY Club.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?