Fed rate hike of 75 basis points in line with expectations! Bitcoin surges 13% to nearly $23,000

The US Federal Reserve (Fed) announced a 75 basis point interest rate hike at 2 am Beijing time today (16), and the benchmark interest rate rose to 1.5% to 1.75%, the largest increase since 1994, and the interest rate level has been higher than 2020 March pre-coronavirus levels in March to curb record high inflation.

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Fed Chairman Powell (Powell) said at the post-meeting press conference: Inflation unexpectedly rose after the May meeting. As a more active response, the Fed decided to significantly raise interest rates, which will help ensure long-term inflation expectations remain stable and the Fed will Look for strong evidence of falling inflation in coming months; meanwhile Powell says next meeting will most likely be a 50 or 75 basis point increase: 2 or 3 yards most likely at next meeting from today’s perspective , it is expected that continued rate hikes will be appropriate, while the actual pace of change will depend on upcoming data and the changing economic outlook.

But he also reassured the market that 3-yard gains won’t be the norm this time around. Powell said consumers are spending, and while they are seeing a slowdown in the economy (the U.S. economic growth forecast for this year has fallen to just 1.7 percent from 2.8 percent in March), it is still growing at a healthy level. Policymakers remained largely confident about the outlook for the U.S. economy.

“Overall economic activity dipped slightly in the first quarter but appears to have picked up since then. Employment has grown strongly in recent months and unemployment has remained low… Inflation remains high, reflecting a combination of the virus, higher energy prices, and broader supply and demand imbalance.”

Markets are pricing in a 77.8 percent chance of a 75 basis point rate hike at the July meeting and a 22.2 percent chance of a 50 basis point rate hike, according to CME’s FedWatchTool data.

The four major U.S. stock indexes collectively closed higher

The Fed raised interest rates sharply again, in line with market speculation for weeks. Investors seem to think that Powell has shown a serious attitude to deal with soaring inflation. U.S. stocks fluctuated higher, and the three major indexes recorded their best one-day performance since June 2.

The Dow Jones Industrial Average rose 303.7 points, or 1 percent, to 30,668.53.

The Nasdaq rose 270.81 points, or 2.5%, to 11,099.16.

The S&P 500 gained 54.51 points, or 1.46%, to 3,789.99.

The Philadelphia Semiconductor Index rose 47.7 points, or 1.77%, to 2,737.5.

Bitcoin surges 13% to near $23,000

In terms of the cryptocurrency market, Bitcoin has also been positively affected. When it touched the lowest US$20,250 in the middle of the night today (16th) and approached the US$20,000 mark, it started a strong rebound after the result of the interest rate hike was exposed at 02:00. It was nearing $23,000 earlier and was up nearly 13 percent in six hours, at $22,702.

Ethereum also rebounded after approaching $1,000 for a while, and rose to $1,246 by the time of writing, a rise of as much as 20% in the past six hours.

The US dollar interest rate hike may cause the US dollar to continue to appreciate relative to other currencies, and in the current environment where mining machine prices are at a trough, investing in mining machines with some non-dollar assets may be one of the ways to preserve value against the market.


Post time: Aug-01-2022