Fed Raises Target Range For Benchmark Rate To Highest Since 2007

Federal Reserve officials increased the target range for the federal funds rate by another 25 basis points today, pushing it to its highest since late 2007.

This latest development could have implications for risk assets, for example cryptocurrencies and equities like stocks, which do not make regular interest payments to their owners.

After this latest rate hike, the aforementioned range now stands at 475 basis points to 500 basis points.

Further, the Federal Reserve issued a Federal Open Market Committee statement assessing current market conditions and providing hints to its future plans.

This latest statement differed from the prior one in many important ways, according to a CNBC article that detailed the changes.

For starters, the communication claimed that “The U.S. banking system is sound and resilient.”

“Recent developments are likely to result in tighter credit conditions for households and businesses and to weigh on economic activity, hiring, and inflation,” the statement added. “The extent of these effects is uncertain.”

“The Committee remains highly attentive to inflation risks,” the communication also noted.

Further, the revised statement indicated that “some additional policy firming may” be needed in order to bring the rate of inflation in line with long-term goals.

This differed from the previous language, which stated that “ongoing increases in the target range will” “be appropriate” to achieve the aforementioned policy objective.

Further, Fed Chair Jerome Powell held a press conference where he provided additional insight.

“If we need to raise rates higher, we will,” he stated, according to a CNBC article.

Further, he threw cold water on the prospect that the FOMC would cut benchmark rates this year. He cited the predictions contained in the latest Summary of Economic Projections, which forecasted a situation of waning inflation and tepid economic growth, as well as greater equilibrium between the supply and demand in the jobs market, CNBC reported.

“In that most likely case, if that happens, participants don’t see rate cuts this year,” he stated.

Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol.