The United States Federal Reserve has raised interest rates again to fight inflation. The 0.75% point hike takes the borrowing rate to 2.25–2.50%.
The United States Federal Reserve has once again raised interest rates, this time by 0.75% points. The central bank cited weakening economic data as the reason behind the hike, and its official said that it would continue to fight the worrying inflation trend.
The United States is currently facing its worst inflation trend in decades, as global macroeconomic trends do not look positive for many nations. The U.S. is not the only country facing high inflation, and countries the world over are struggling to keep the issue in check.
Federal Reserve Chair Jerome Powell said that “it doesn’t make sense that the U.S. would be in recession” and outright said that he does not think that the U.S. is in a recession. The borrowing rates are now between 2.25% and 2.50%.
Powell also said that another hike could be due in September In the announcement, the central bank said,
“Recent indicators of spending and production have softened. Nonetheless, job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures.”
The Federal Reserve says that it is focused on returning to the 2% objective. In the meantime, consumers and markets will face an uncertain time heading forward.
Consumers will face the brunt of the impact
Meanwhile, consumer prices have shot up this year. The U.S. Consumer Price Index reached 8.55% in March 2022, and this rise in prices can be seen across many countries.
FTX CEO Sam-Bankman Fried has also said that the main reason for the crypto market crash was the interest rate hike. However, he did not criticize the Fed and said that they were in a difficult position. The Fed is not alone in this action, as other authorities have also done the same, including India.
Can crypto make good on its promise as a hedge?
Crypto has long been thought of as a hedge against inflation. It is the reason why many large firms have invested in crypto. Many continue to do so, despite the ups and downs the market has faced.
But over the past two years, the narrative has weakened, as crypto and the broader global markets have begun to show a stronger correlation. Some investors have turned away from more volatile assets like crypto as they seek safer assets in uncertain times.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.