The Long Wait Finally Ends
The United States Federal Reserve has finally increased the interest rate of the country on Wednesday for the first time since it was last increased in 2018. The United States was swiftly followed by the Bank of England, which raised interest rates in the United Kingdoms by 25 basis points in accordance with overall market speculations over the last couple of weeks while the increase was still in the pipeline.
Bitcoin, which is the world’s leading crypto asset, was trading high at $40,106 on the popular Bitstamp exchange at the time of putting this piece together. Bitcoin has almost shed all of the losses it incurred when it dropped about a vast 1.5% on the news of the interest rate increase.
As a result of the rapidly rising inflation, which has been very difficult to curb, the Federal Reserve has been under continuous pressure from within and out to find ways of keeping the price of consumer goods and other household items firmly under control.
Bitcoin Remains a Safe-haven
Risk and Safe-haven assets like Bitcoin and others in its category were boosted by the unprecedented pandemic-style relief package by the central bank to individuals and businesses. While the relief has gone for so long, the Federal Reserve is currently backtracking on its initial support for the program so it can begin to reign in the stubborn inflation that has attended the surplus pumped into the United States economy.
While addressing a press conference on Wednesday, the Federal Reserve Chair, Jerome Powell, stated to the press that the central bank was going to cut down on its balance sheet while it holds its next meeting of the Federal Open Market Committee. The central bank, however, has not given any clue on the schedule of the proposed meeting.
Jerome Powell said that the Federal Reserve is keenly attentive to possible risks of a more upward trend of inflation. On the part of the central bank, it is speculated that it plans to steadily increase interest rates through the course of 2022 as it has adopted a very hawkish position to tackle the weight of inflation.
Jerome Powell made it clear that resolving the inflationary crisis is well above the Federal Reserve’s goal while he pointed to the possibility of a lasting disruption in the supply chain. The Federal Reserve will keep adapting all its policies in accordance with changes in the economy, he said.
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