The Fed decided to raise interest rates by 25 basis points. A 25 basis point rate increase was also expected.
Bitcoin’s initial reaction was as follows:
Now all eyes are on the press conference by FED Chairman Kevin Warsh, which will begin at 9:30 PM.
In the US, inflation remaining above the Fed’s 2% target for over five years is among the key factors strengthening expectations of renewed monetary policy tightening. The upward impact of the war in the Middle East on prices has also recently increased concerns about the inflation outlook.
Federal Reserve Chairman Kevin Warsh, in a speech at the Jackson Hole Symposium in August, stated that “we have work to do” in the fight against inflation. Warsh also emphasized that he would avoid giving premature guidance to the markets regarding interest rate decisions and argued that members of the Federal Open Market Committee (FOMC) should thoroughly discuss current economic data at each meeting.
The markets are not solely focused on the interest rate decision. The Federal Reserve’s Summary of Economic Projections, to be released alongside the meeting, and the “dot plot,” which shows members’ interest rate expectations for the coming years, will also provide important signals regarding the future direction of monetary policy.
On the other hand, US President Donald Trump’s pressure on the Fed to lower interest rates continues. On September 4th, Trump reiterated his demand for lower interest rates in a post on Truth Social, stating, “Lower interest rates, or I will stop trading with countries with whom we have a trade deficit.”
*This is not investment advice.