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FED raises policy rates by 25 basis points, causing significant stir in the markets. Jerome Powell, FED Chairman, highlights important points during his live speech. Current state of the crypto market remains steady.
All eyes in the markets were turned to the Federal Reserve’s (FED) interest rate decision throughout the week. The market expectation was that the FED would raise the policy rate by 25 basis points. Indeed, the FED did increase the policy rate by 25 basis points. FED Chairman Jerome Powell began his speech live after the interest rate decision, where he made critical statements.
FED Increases Interest Rate by 25 Basis Points
While the FED left the policy interest rate unchanged in June, FED Chairman Jerome Powell had signaled further interest rate hikes in the later months of the year in his speech. Many FED officials had expressed in their statements to the public in recent weeks that additional rate hikes would be needed for 2023, thus forming such an expectation in the markets.
The expectation for the interest rate decision to be taken at the FED’s July meeting was also towards a 25 basis point interest rate increase. Indeed, the FED increased the policy rate by 25 basis points. With the latest increase, interest rates have risen to their highest level in the last 22 years.
FED Chairman Powell Gives Live Speech
FED Chairman Jerome Powell began to speak live after the FED interest rate decision announced at 21.00 Turkey time, where he made critical statements. The highlights of Powell’s speech are as follows:
- Powell: We will make the decision for the next meeting depending on the data. The effects of tightening have not yet been felt.
- Powell: The housing sector has recovered, but it remained below the 2022 level.
- Powell: Growth in consumer spending decreased compared to the beginning of the year.
- Powell: There are signs that labor supply and demand are better balanced.
- Powell: Inflation slowed down slightly. We have a long way to go for our 2% target.
- Powell: I see the effects of tightening in some sectors. The FOMC will consider cumulative tightening and delays.
- Powell: Reducing inflation will likely mean growth below the trend.
- Powell: We have not made a decision about future meetings yet.
- Powell: Data before the meeting generally came parallel to expectations.
- Powell: If the data tells us so, we may not increase in September.
- Powell: If the data says we need more increases, we will do it.
- Powell: We believe that monetary policy is restrictive.
- Powell: Economic resilience is a good thing. Stronger growth may lead to more inflation.
- Powell: We will be careful about receiving too many signals from a single data point regarding inflation. We will see whether the signal from the June CPI will repeat.
- Powell: The whole of the data is important, and especially progress in inflation should be focused on.
Current Situation in the Crypto Market
The leading cryptocurrency Bitcoin, which has been trading relatively flat between the price levels of 29,100 dollars and 29,300 dollars throughout the day and is trading at 29,300 dollars at the time of writing, has not yet seen a sharp price movement. Ethereum (ETH) started trading from the price levels of 1860 dollars after its recent price movements following the FED interest rate decision, while the total market value of the crypto ecosystem stands at 1.18 trillion dollars.
Disclaimer: The information in this article does not contain any investment advice. Investors should be aware that cryptocurrencies are highly volatile and carry risk, and they should make their transactions based on their own research.
