FOMC Meeting: Fed Hikes Rates for First Time Since 2023

The U.S. Federal Reserve has hiked interest rates by 25 basis points, the first hike since July 2023. The Fed rate hike comes in line with expectations as inflation concerns stemming from the Middle East crisis mount.

FOMC Makes First Fed Rate Hike Since 2023

In a press release, the Federal Reserve announced that the Committee decided to raise the target range for the federal funds rate by 25 basis points. This now brings the target range to between 3.75% and 4%.

Notably, the decision on a 25 bps Fed rate hike was unanimous, with all 12 voting FOMC members supporting the decision. The Committee noted that inflation remains elevated and that the hike will help support a timelier return to its 2% goal.

The FOMC had been in focus for a while now as oil prices have again surged on the back of recent escalations in the U.S.-Iran war. Moreover, August PPI and CPI inflation data came in hot, increasing bets that the Fed would hike rates at this meeting.

Meanwhile, the crypto market has faced huge volatility ahead of the Fed rate hike. However, Bitcoin and the broader market surged following the rate decision. BTC is trading just below the psychological $76,000 level, up on the day, according to TradingView data.

Another Increase Expected This Year

The FOMC’s latest projections show that 12 of 18 Fed officials expect at least one more Fed rate hike this year. Meanwhile, four expect at least two hikes while two see no further hikes this year. Fed Chair Kevin Warsh revealed in his press conference that he did not submit any projections.

Crypto traders are also betting on a second rate hike this year. Data from the top crypto prediction market platform Polymarket shows a 69% chance that the Fed would hike rates by 25 bps twice this year.

However, the second Fed rate hike this year is likely to come at the December FOMC meeting rather than next month. Polymarket data shows a 62% chance that interest rates remain unchanged following next month’s meeting.