The Federal Reserve System (Fed) at its June 14-15 meeting raised the target range for the federal funds rate by 75 basis points—to 1.5-1.75%. This sharp uptick is the regulator’s first since 1994.
At the press conference following the meeting FOMC Chair Jerome Powell said that in July the rate could be raised by another 0.5%-0.75%.
Watch Chair Powell’s statement from the #FOMC press conference:
Intro clip: https://t.co/Y3l7YqcWtw
Full video: https://t.co/JjXfKZpKef
Press Conference materials: https://t.co/nAdBVSVVT0— Federal Reserve (@federalreserve) June 15, 2022
“In the coming months we will look for evidence that inflation is cooling. The pace of rate increases will still depend on incoming data, but a rise of 50 or 76 basis points seems more likely at the next meeting,” Powell said.
The regulator also updated its economic projections to reflect a weaker outlook. It now expects US GDP to grow 1.7% in calendar year 2022 (previously 2.8%).
Overall, the market had priced in a rate hike — futures priced in a 96% probability of the move. In response to the announcement, the S&P 500 closed the June 15 session up almost 1.5%, and the Dow Jones Industrial Average up 1%, according to TradingView.
The crypto market also rose after the FOMC meeting. Bitcoin prices over the past 24 hours rose 2.7%, Ethereum 4.7%. All top-10 coins by market cap were in the green, according to CoinGecko.
As of writing BTC was trading near $21,770, ETH near $1,170.
In December 2021 the Fed allowed three rate hikes in the following 12 months. The reason — inflation picked up.
In March the regulator, for the first time since 2018, raised the target range to 0.25-0.5%. Traditional and crypto markets reacted to the decision with gains. Among digital assets, the local rally continued until April — Bitcoin and Ethereum hit year-to-date highs.
In May the Fed again raised rates. Contrary to forecasts, the central bank’s policy proved softer — the target range rose by 50 bps (vs. 75 bps expected).
Against this backdrop, Bitcoin briefly surpassed $40,000, but the surge was short-lived — the same day Bitcoin fell below $36,000, marking the start of a protracted correction.
Earlier, Galaxy Digital’s Mike Novogratz said that Bitcoin prices would hold above $20,000, and Ethereum would not drop below $1,000.
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