The Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75% to 4%, its first hike since 2023. Bitcoin spiked toward $76,000 in the minutes after the unanimous vote, a decision markets had already priced in.
The Federal Reserve raised interest rates to a target range of 3.75% to 4% Wednesday, up from 3.50% to 3.75%. All 12 voting members of the Federal Open Market Committee backed the move, the Fed's first hike since 2023.
Bitcoin spikes after the vote
Bitcoin traded around $75,200 in the hours before the announcement. It then spiked to $76,000 and kept climbing, Decrypt reported. CryptoPotato clocked the move as a surge to $76,500, calling the reaction a surprise given the asset's recent slide.
CoinGape reported Bitcoin trading just below the $76,000 level, up on the day per TradingView data. Still, the broader crypto market lost around 2.18% on the day, Decrypt said.
Why the Fed hiked now
The case for a rate hike hardened after last week's inflation data. The Producer Price Index rose 5.4% annually in August, accelerating from 4.8% in July, with goods prices climbing 1.1% on the month, mostly on rising energy costs.
The Consumer Price Index followed a day later, rising 3.4% annually, the same pace as July, though the monthly gain accelerated to 0.4% from 0.1%. Traders had priced in a 93% chance of the hike heading into the meeting, according to CME's FedWatch tool.
What's next for rates
Fed officials remain split on how much further to go. Twelve of 18 officials expect at least one more rate hike this year, while four expect at least two and two see no further increases, per the FOMC's latest projections.
Polymarket data shows traders assign a 69% chance to a second 25-bps hike this year, CoinGape reported. The Fed's next meeting is set for October 27-28, with its December 8-9 gathering to bring an updated dot plot.
Sources: Decrypt, CoinGape, CryptoPotato
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