The U.S. Federal Reserve has increased its benchmark federal funds rate by 25 basis points to a target range of 3-3/4 to 4 percent, marking the first rate hike since 2020. The decision, made unanimously by the Federal Open Market Committee, follows recent economic data and hawkish signals from Fed Chair Kevin Warsh.
The rate adjustment comes amid robust U.S. labour market performance and inflation figures released last week, which reinforced concerns about sustained price pressures. Warsh’s recent speeches, emphasizing the need for “cautious vigilance” on inflation, were cited as influential in the committee’s deliberations.
Bitcoin’s price initially surged to $76,500 in response to the Fed’s decision, reflecting investor optimism about monetary policy. However, the asset later fell after the Senate failed to pass the CLARITY Act, a legislative proposal aimed at regulating cryptocurrency. The outcome introduced uncertainty about the sector’s near-term outlook.
The Fed’s move aligns with its broader strategy to balance inflation control with economic growth, though analysts note the challenge of maintaining this equilibrium amid shifting global conditions. The central bank’s next policy meeting is scheduled for December, with further rate adjustments likely depending on incoming data.
Written by Kate Harper
Economics Desk
