- A decision made by the FOMC majorly influenced the market performance.
- As anticipated, the FOMC hiked the base interest rate by 25 basis points to 4.5%–4.75%.
- The Federal Reserve intends to adopt the increases to reduce inflation.
Earlier yesterday, the Federal Open Market Committee issued a decision that substantially influenced market performance. As a consequence, the cryptocurrency market has exploded, with Bitcoin accounting for the majority of its cryptocurrency values.
According to a Federal Reserve press release, the FOMC lifted the benchmark interest rate by 25 basis points, as expected, to a target range of 4.5% to 4.75%. This drops from December’s 50-basis-point rise and the four previous 75-basis-point hikes.
After committing to “ongoing hikes,” the committee declared it was as committed as ever. This is consistent with the December dot plot, which indicated a quarter-point increase in interest rates in both March and May. When asked how many more rate rises would be necessary to achieve monetary policy constraint, Powell responded, “a couple more.”
Further, Powell emphasized that the biggest focus remains on the services sector, excluding housing. The tight labour market in this sector may significantly influence prices, and the FOMC closely monitors this aspect of the economy.
Additionally, the Federal Reserve plans to implement the rises to curb inflation, which, despite recent declines, is still at or around its peak point ever since the early 1980s.
In a departure from the previous phrasing, the post-meeting statement recognized that inflation has slowed marginally but remained high.
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However, given the FOMC’s verdict, the markets as a whole are looking quite healthy, and now is an exciting moment to be involved in the financial sector. With the FOMC decision throwing gasoline on the fire, the following few days are certain to be fraught with market activity.
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