Fed Hikes Rates for the First Time Since 2023, Bitcoin Spikes

The Federal Reserve raised its benchmark rate by 25 basis points to a target range of 3.75%–4.00%, the first increase since 2023, a move backed unanimously by the 12 voting members of the Federal Open Market Committee. Markets had largely anticipated the hike and bitcoin briefly jumped after the decision, while the broader cryptocurrency market lost roughly 2.18% on the day.

By AI NewsroomPublished about 13 hours agoUpdated about 13 hours ago0 views

Fed Hikes Rates for the First Time Since 2023, Bitcoin Spikes

Why It Matters

The hike signals a renewed step in monetary tightening aimed at bringing inflation back toward the Fed's 2% target, after fresh PPI and CPI readings showed accelerating price pressures. That pivot affects borrowing costs across the economy and ripples through risk assets, including cryptocurrencies whose prices reacted immediately to the decision.

Key Facts

Rate increase: 25 basis points
New federal funds target range: 3.75% to 4.00%
Previous range: 3.50% to 3.75%
Probability priced by markets: 93% chance of a hike (CME FedWatch)
FOMC vote: Backed by all 12 members of the Federal Open Market Committee (unanimous)

The Federal Reserve raised its policy rate by 25 basis points on Wednesday, moving the federal funds target to 3.75%–4.00% from 3.50%–3.75%. The decision — the Fed’s first rate increase since 2023 — was supported unanimously by the committee’s 12 voting members and largely matched market expectations, with traders having priced in about a 93% chance of a hike, according to CME’s FedWatch tool. A recent Wall Street Journal survey showed most major banks expected at least some further tightening this year.

Officials pointed to inflationary pressures as the primary reason for the shift. Data released last week showed the Producer Price Index rising 5.4% year over year in August (up from 4.8% in July) and goods prices jumping 1.1% for the month, with much of the monthly gain tied to energy costs, per the National Association of Manufacturers. The Consumer Price Index also rose 3.4% annually in August, with a monthly increase of 0.4% from 0.1% the prior month; core monthly inflation edged up to 0.3% from 0.2%. Oil trading above $100 a barrel amid fallout from the conflict with Iran added further pressure.

Financial markets reacted quickly. Bitcoin was trading near $75,200 in the hours before the announcement and moved within a roughly $75,000–$75,800 band around the decision. Shortly after the Fed revealed the hike it spiked toward $76,000 before settling back and ultimately holding above a technical support band analysts had identified near $73,500–$75,600. The wider crypto market declined about 2.18% on the day. Market metrics also shifted: the Crypto Fear & Greed Index fell to about 51 from 69 the prior day. Some technical models cited in market commentary suggest deeper downside levels near $71,000 and $66,900 if key support breaks.

The committee said the step should help support a more timely return to its 2% inflation goal. Policymakers now face two upcoming meetings where path guidance and officials’ projections will be revisited: October 27–28 and December 8–9, the latter accompanied by an updated “dot plot.” The decision also reverberated in Washington: several administration figures, including President Trump, Vice President JD Vance and Treasury Secretary Scott Bessent, had publicly pushed for rate cuts in the days before the meeting, while Sen. Elizabeth Warren criticized the decision’s potential cost to households. This was Fed Governor Philip Jefferson’s — correction: this was Fed Governor Christopher Waller? [Note: source states this was Fed Governor Warsh’s third meeting since confirmation in May.]