Fed approved a half point, crypto acts like Big Tech

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Jerome Powell, Fed Chairman
  • get used to half -point hikes, said Powell
  • crypto is traded like a large technology share, and risk systems do not develop well with rising interest rates, warned analysts

The Federal Reserve increased the interest rates by half a percentage point on Wednesday, a step that the market had largely expected, since inflation continues to be more than percentage points above the central bank's finish.

The fed also announced its plans to reduce its 9-billion-dollar system portfolio, starting with bonds without which To reinvest revenues in new securities instead of selling them on the free market.

"Inflation is far too high," said Fed chairman Jerome Powell during a press conference after the statement was published. "It is important that we reduce inflation if we want to have a persistent phase of strong labor market conditions that everyone benefits from."

The shares remained largely unchanged after the announcement, with the Dow Jones Industrial Average rose by 0.4 %, the S&P 500 remained unchanged and the technology -heavy Nasdaq lost 0.5 %

"50 basis points were priced in on the market, so that was to be expected," said Jeffrey Howard, head of the institutional sales and business development at OSL. "The market recovered at the beginning and has only sold a little since then because there are some other aggressive comments on a possible increase of 75 basis points at the next session."

The committee does not consider an increase of 75 basis points "active", and a further increase of 50 basis points can be expected if the current inflation and market conditions stop, said Powell.

Bitcoin and Ether recovered due to the news and rose by about 3.5 % and 1.2 %. Cryptocurrencies have recently been traded in harmony with stocks, similar to a large technology share, said Howard.

"The market mood is very declining, not only in technology shares, but also in risk systems in general," said Howard. "Risk systems do not cut off well in an environment with rising interest rates, so I generally think that the market is declining."

Despite the widespread concern of economists, that the Fed reacted too slowly to react to inflation, Powell is confident that the central bank can ward off recession.

"I think we have a good chance of restoring price stability without recession," he said. "I see a strong economy now. For example, I see a very strong job market, companies cannot find people who can hire ... We usually have unemployment in a recession."

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The contribution Fed approves interest rate increase by half a point, Crypto Trades Like Big Tech is not a financial advice.