The United States Federal Reserve just made history by issuing a fourth-straight three-quarter-point rate hike this week.
As expected, the FED announced a 0.75% interest raise. With the massive increase, the central bank’s benchmark lending rate now has a new target range of 3.75% to 4%, reaching the country’s highest interest rate since 2008.
The Fed’s decision on Wednesday represents the Fed’s toughest policy move since the 1980s and is likely to exacerbate financial damage for millions of American businesses and households by raising borrowing costs even higher.
Slowing Down Interest Rates in December
Despite the latest increase, the FED chair, Jerome Powell, suggested that the Fed may slow its three-quarter-point rate pace in December or January.
At the FED’s announcement, Powell went on to say that America’s interest’s could be reaching “restrictive territory”. He then went on to say that it will be important to “slow the pace of increases” in the near future. However, no official decision has been made by the FED so far.
According to Powell, when speed becomes less critical, the terminal level of interest rates and the amount of time the Fed will need to keep rates there take precedence.
Despite this, the head of the United States Federal Reserve stated that the Federal Reserve is not considering pausing its interest rate hikes, which he believes would be premature.
That means that despite not planning on significantly lowering interest rates, the Federal Reserve already plans on slowing down its interest policies in the future.
“Our decisions will depend on the totality of incoming data and their implications for the outlook of economic activity,” Powell said.
Bitcoin Holding On
Differently from the other major FED raise hikes, Bitcoin and other major cryptocurrencies walked off seemingly unfazed by the latest raise hike by the American branch of government responsible for the nation’s economy.
BTC was trading at around the $20,500 level at the date of the FED’s statement, after the interest raise was announced, bitcoin was able to withstand the market pressure by not breaking below the $20,000 resistance line.
Today, Bitcoin is down about 2%, but it is still fighting with the bears since it is above major psychological support for the market: $20,000.00. Ethereum (ETH) suffers further, falling 3.28%, but still above the $1.500 mark.
Both of the largest cryptocurrency exchanges have had weekly losses of 1.65% and 0.66%, respectively. Ethereum is losing value this week after a strong surge that took it from US$ 1.300 to a high of US$ 1.500 on the 23rd of October.