Interest rates in the United States have reached their highest point since 2007, at 3,25%.
The United States Federal Reserve Bank, known as the FED, announced a New increase in interest rates, of 75 basis points or 0,75%, for the third consecutive time.
The Fed's move is in response to inflation data released by the US Bureau of Labor Statistics in the middle of this month, which showed year-on-year inflation in the country at 8,3% for the month of August.
Following the release of these results, financial analysts anticipated that the FED would raise interest rates again and indicated how likely it was that the agency would maintain the same increase that has been seen in recent months. However, the announcement of a new increase in interest rates by 75 basis points has negatively impacted the crypto market, which shows a 2% drop at the time of writing this article.
It may interest you: Cryptocurrencies are trading down 5,2% after US inflation data
The current capitalization of cryptocurrencies is below $1 billion dollars, with Bitcoin (BTC) trading very close to $18.700 and Ethereum (ETH) below $1.300.
In the Top 10 of the main cryptocurrencies on the market, the only cryptocurrency that is on the rise at the moment, except for stablecoins, is Ripple (XRP), whose value has benefited from the Possible conclusion of the case against the SEC after two years.
The Fed continues to tighten its monetary policies to try to control inflation
Raising interest rates is a move that the FED and other central banks are making to stop inflation. In their latest reports, the European Central Bank (ECB) and the Bank of Canada announced similar increases in their interest rates, with the ECB being the least aggressive in tightening its monetary policy.
In the case of the FED, the US Federal Reserve's goal is to bring inflation rates in the country back to 2%. This goal, according to several experts, could take until 2023 at the current rate.
The US Bureau of Labor Statistics will release a new Consumer Price Index (CPI) report on October 13. The release of these inflation results is also expected to affect markets, including the cryptocurrency market.
Crypto Market Insights
BitBull Capital CEO Joe DiPasquale told CoinDesk that the crypto market is likely to remain bearish and even test new lows until U.S. inflation levels improve. Quantum Economics market research director Alexandre Lores also expects Bitcoin and cryptocurrencies to react bearishly or neutrally to the upcoming FED announcements, according to CoinDesk.
On the other hand, according to the financial website MarketWatch, JP Morgan analyst Marko Kolanovic, forecasts a moderate decline in risk markets this year, despite the Federal Reserve’s increasingly aggressive monetary policy. Kolanovic explained that “solid earnings, low investor positioning and well-anchored long-term inflation expectations should mitigate any downside in risk assets” from now on.
Although inflation levels in the United States remain high, the Federal Reserve assured that current indicators point to modest growth in spending and production. In addition, during Wednesday's meeting, the FED indicated that job gains have been solid in the country in recent months and that the unemployment rate has remained low.
Continue reading: How has the Fed's new interest rate hike affected the price of Bitcoin?
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