The announcement comes to materialize the thesis that has been expected for months, which is why the markets did not react with abrupt changes to the increase in interest rates by the FED. The agency still reiterates that the priority is to address the inflationary levels that weigh on the local economy.
The US Federal Reserve (FED)the agency responsible for the monetary policies of the North American nation, today announced a new increase in interest rates, which rise again by half a percentage point, as had been anticipated on previous occasions.
FED raises interest rates again
This was announced today by the president of the Fed, Jerome Powell, who made the corresponding announcements at a press conference held today, where he revealed that in addition to the half percentage point that increases interest rates, the agency will also continue to reduce its asset portfolio, starting by allowing bonds expire without reinvesting the proceeds in new securities, rather than selling them on the open market.
On inflation and the measures, Powell commented:
“Inflation is too high…it is essential that we bring inflation down if we want to have a sustained period of strong labor market conditions that benefit everyone.”
As commented in previous editions, the announcements made by the FED today go hand in hand with Powell’s remarks during a meeting for the International Monetary Fund (IMF) held last April, where he revealed that the body he chairs would be considering raising interest rates even more, before or which he commented at the time:
“I would say there will be 50 basis points on the table for the May meeting… We are really committed to using our tools to bring inflation back to 2%.”
The goal is to reduce inflation
One of the aspects that worries many analysts is the growth that inflation rates have seen since the COVID-19 pandemic began in 2020, which made it necessary for the US government to print even more dollars to finance mainly order programs. social, aimed at addressing the consequences that this situation brought with it for many families.
Let us bear in mind that a recently published report placed inflation rates for the US at over 8.5%, these being the highest levels seen in the last 40 years. At the time, Powell described the measures taken by the FED What “absolutely essential to restore price stability”and I add:
“We’re really going to raise rates and quickly get to levels that are more neutral and then really tight … if that’s appropriate once we get there.”
The reaction of the markets
Unlike what has been seen on other occasions, after the announcements of the FED Various indices reveal that stock markets have remained virtually unchanged.
index dow jones shows a slight increase of 0.4%; S&P 500 shows no noticeable changes; while NASDAQ goes down with a fall of 0.5%.
Called aggressive by some but much needed by others, 0.5% interest rate hikes appear friendly enough for US businesses and residents. Analysts assure that the FED would not dare to decree an even larger increase, although this may change depending on the performance of the economy and the evolution of inflation rates.
As for the crypto sector, it could be said that the markets of the main cryptocurrencies reacted positively after the announcement. Take for example the cases of Bitcoin and Ethereum, the most reputable exponents of the sector, which increased by more than 3.1% and 1.8% respectively. However, it remains to wait and see what the longer-term effects will be amid the uncertainty that shakes the ecosystem in general.
Angel Di Matteo version / DailyBitcoin
Picture of unsplash
WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.