Summary: Jerome Powell of the Federal Reserve Bank announced they are hiking interest rates by 0.75%. This would be the most significant interest rate increase since 1994. This increase would raise the Federal Funds rate between 1.5% and 1.75%. Most Fed officials estimated the rate would increase to 3.4% by the end of this year and ...

Jerome Powell of the Federal Reserve Bank announced they are hiking interest rates by 0.75%. This would be the most significant interest rate increase since 1994. This increase would raise the Federal Funds rate between 1.5% and 1.75%. Most Fed officials estimated the rate would increase to 3.4% by the end of this year and to 3.8% in 2023. This would be a substantial shift from projections in March that saw the rate rising to 1.9% this year.

The Fed also appears to be doubling down on this assertion by projecting another 0.75% increase in July. In a recent statement, he asserted, "From the perspective of today, either a 50 basis point or a 75 basis point increase seems most likely at our next meeting." 

He went on to say, "the pace of those changes will continue to depend on incoming data and evolving outlook on the economy." "Clearly, today's 75 basis point increase is an unusually large one, and I do not expect moves of this size to be common." These increases should dampen inflation, but the impact on the job market and economy remains to be seen.

"Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures," the central bank's Federal Open Market Committee announced in a statement following a two-day meeting in Washington. "The committee is strongly committed to returning inflation to its 2% objective." 

Since March, the Fed has remained firm on the opinion that they can control inflation with the unemployment rate remaining around 3.5%. Inflation has persistently remained at a 40-year high, with no hint of correcting as Fed policymakers anticipated.

This increase paints a strong case for Bitcoin in the long term, which is not possible to manipulate to influence the economy, although it could affect prices even more severely in the short term as funding for Crypto related projects becomes more scarce.

Author: Garrett Meifert