Fed Hikes Rates, Setting Stage for Aggressive Tightening Cycle

The Federal Reserve raised its target range for the federal funds rate by 25 basis points to 3.75%-4.00% in a unanimous decision, marking Kevin Warsh's first policy action as chief.

Crypto markets didn't react significantly to the hike, with CME FedWatch data indicating about 92% odds of a 25 bps move before the decision.

However, Warsh's remarks and aggressive posture were seen as signals that the Fed believes the policy rate is still not high enough.

The markets are now bracing for a more aggressive tightening cycle, with interest rate swaps indicating a cumulative 75 basis point hike by mid-2027, exceeding the median projection in the Fed's dot plot.