The Federal Reserve raised its benchmark interest rate by 25 basis points on Wednesday. The move lifted the federal funds target range to 3.75%-4%. All 12 voting FOMC members supported the decision. The increase marked the first rate hike since July 2023.
Markets had largely anticipated the move before the announcement. Consequently, the immediate reaction across risk assets remained relatively contained.
Fed Keeps Further Tightening on the Table
However, the Fed delivered a more significant signal through its updated economic projections. Sixteen of 18 policymakers now expect another 25-basis-point increase during 2026.
The median projection places rates at 4%-4.25% by year-end. Additionally, policymakers expect rates to remain there through 2027.
The central bank also raised its 2026 inflation forecast to 3.7%. Meanwhile, officials increased their growth forecast to 2.3%. They also lowered their unemployment projection to 4.1%. Hence, policymakers appear focused on containing inflation without sacrificing labor-market strength.
Bitcoin Remains Under Pressure
Bitcoin traded near $75,580 before the decision and later remained under pressure. BTC recently stood around $75,756, down 4.2% over seven days.
Moreover, Treasury yields have strengthened alongside expectations for tighter policy. The 10-year yield recently moved above 5%, increasing pressure on risk assets.
Consequently, Bitcoin traders now await further guidance from Fed Chair Kevin Warsh. Additionally, markets will assess whether future tightening becomes necessary as inflation remains elevated.
Related: Fed Decision Could Decide Gold’s Next Move: Will XAUUSD Reject $4,355 or Break Above $4,388?
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