Federal Reserve Raises Interest Rates, Bitcoin Prices Are Not Affected

Bitcoin prices are still stable even though the Fed raises interest rates. (Photo; Doc. Unsplash)

JAKARTA - The US Federal Reserve again raised the benchmark interest rate on Wednesday, between 5 percent and 5.25 percent. However, this news does not affect the price of Bitcoin which remains stable in the range between IDR 409 million to 416 million per coin.

The increase in interest rates is in line with market expectations, where markets account for only 11.8 percent of the chance that the Federal Open Markets Committee (FOMC) will keep interest rates fixed, based on FedWatch CME monitoring tools.

The central bank has raised interest rates since last year in a bid to ease inflation in the soaring consumer price index, reaching its highest level in more than 40 years by 9.1 percent in June last year.

Several financial commentators such as the founder of BitMEX, Arthur Hayes, predict that the Fed may stop raising interest rates, and even start lowering them earlier than expected after several bank failures occurred before the previous interest rate hike in May.

Meanwhile, several others such as Jeffrey Lacker's former Federal Reserve head, think that the Fed will remain firm in raising interest rates amid bank failures, rather than signaling the market that something is wrong.

As of March 2023, inflation has been successfully reduced to 5 percent although some believe that this will not last long as the Federal Reserve's efforts to protect the banking system, which has injected hundreds of billions of dollars back into the economy.

The US banking system is stable and resilient to shocks, the Fed said in a press release accompanying the announcement of an increase in interest rates. "Stricter credit conditions for households and businesses are likely to burden economic activity, recruitment, and inflation."

The central bank added that it would adjust their monetary policy "if any risks arise that could hinder the achievement of the Committee's goals."