Fed Hikes Rates to 3.75%-4%, Markets Anticipate Next Move

The Federal Reserve raised its benchmark interest rate by 25 basis points to a range of 3.75% to 4%, marking its first increase since 2023, according to the Federal Reserve's statement.

Chair Kevin Warsh stated that 'the plain fact is that inflation is too high and has been for too long,' emphasizing the need for more evidence that underlying inflation is moving toward the 2% target at sufficient speed.

The Fed's updated projections show that 12 of 18 committee members expect at least one more quarter-point hike before year-end, with four expecting half a point or more of further tightening, indicating a hawkish skew and potentially a longer cycle than markets had priced heading into the meeting.

Crypto market reaction was muted, with Bitcoin trading near $75,980, down about 1% on the day and roughly 4% over the past week, according to CoinGecko. Analysts suggest that the hike itself carried little information as markets had settled on it days earlier, but the renewed hawkish stance could lead to risk-on assets repricing.

Perpetual futures showed net selling following the announcement, with roughly $82 million in Bitcoin and $68 million in Ether sold over the hour, while exchange flows indicated repositioning rather than a uniform retreat. Analysts attribute the muted spot reaction to the Fed's decision being largely anticipated by crypto markets.