Cryptos, stock rally for the fourth time in a row, interest rate increase by 0.75 %

Cryptos, stock rally for the fourth time in a row, interest rate increase by 0.75 %

The Federal Reserve doubled its quantitative tightening strategy on Wednesday and increased interest rates by three quarters of percentage points for the fourth time in a row.

The US Federal Reserve cited a slowdown with consumer expenses and the level of production. This step marks the sixth rate increase in a row by the Fed, a strategy that she hopes that it will contain the highest inflation that the country has experienced for more than four decades.

"The committee assumes that ongoing increases in the target area will be appropriate to achieve a monetary policy that is sufficiently restrictive to attract inflation over time to 2 percent", wrote members of the Federal Open Market Committee (FOMC) in A statement at the end of their two -day fundamental session on Wednesday. "When determining the pace of future increases in the target area, the committee becomes the cumulative tightening of monetary policy, the delays with which monetary policy affects economic activity and inflation, as well as economic and financial developments."

The overall economic activity seems to have slowed down, wrote central bankers and referred to the continuing invasion of Russia in Ukraine.

When the central bank decided in June in June to raise interest rates for the first time in this cycle by 75 basis points, Fed chairman Jerome Powell called the step "unusually large". But if the current conditions last, higher increases could become the norm.

The cryptoma markets recovered due to the news that were largely priced in according to analysts. Bitcoin rose by 0.7 %, while Ether recorded an increase of 01 %. The S&P 500 and Nasdaq increased by 0.6 % and 0.4 %.

"This rate increase of 75 basis points was largely expected, and the markets have reacted accordingly," said Steven McClurg, co -founder and Chief Investment Officer of the Fund Manager for Digital Wealth Value Valkyrie Investments. "The language in today's announcement is also clear that the Fed does not want to limit itself to increasing a further 50 or 75 basis points in December; and a target rate of five percent at the end of the first quarter makes absolutely sense."

The Job Opening and Labor Turnover Survey (Jolts) from Tuesday pressed the shares down when the data showed that the job offers rose in September.

"The Jolts report implies that the bottlenecks on the job market do not drop significantly, and that means continuing wage pressure," said Tom Essaye, founder of Sevens Report Research. "Persistent wage pressure supports inflation, and since the Fed (for the time being) only concentrates on inflation, Jolts therefore caused a decline in shares."

The markets were happy that the Fed moved as expected, but the associated profits were historically only of short duration, Nicholas Colas, co -founder of Datatrek Research said.

"During the last three FOMC sessions, the S&P 500 increased average +0.8 percent on the day of the announcement, but lost these profits the next trading day and was unchanged in the next week," said Colas.

The Fed has made it clear that it is ready to further increase interest rates as required in order to reconcile the record inflation recently.

"Today, I think we have just moved to the very lower level of what could be restrictive. And in my opinion, in the opinion of the committee, there is certainly still a lot to do," said Powell in September, after the central bank had decided its third increase by 75 basic points.

According to data from the CME Group, the futures markets predicted a probability of 51.7 % for an increase of 50 basis points in December.

"markets want clarity," said Colas. "[Powell] can't really deliver that yet."

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The post "Cryptos, Stocks Rally on Fourth Straight 0.75% interest rate increase" is not a financial advice.