Regardless of the fears surrounding the US banking sector in recent times, the Fed followed through on its plans to reduce inflation as it hiked the interest rate by 25 basis points on Wednesday.

This decision had a notable effect on the price of Bitcoin, as it pumped by $300 within 5 minutes of the announcement.

Bitcoin at the start of the day was trading at $28,216 and then rose to $28,417 ahead of FOMC.

The cryptocurrency then moved upwards to $28,752 following the decision on the interest rate. It traded for $28,480 at that time.
According to Coinglass, within 1 hour after the announcement, there were $19.64 million in liquidations.

This decision took the policy interest rate of the Fed up to a range of 4.75% to 5%.
In February, CPI inflation clocked in at 6%, which the Fed seeks to reduce to a target of 2% by increasing interest rates.

Jeffrey Lacker former Richmond Fed President claimed on Tuesday that hiking the rates further rate is a necessity to achieve that goal and that there was still room to further tighten the economy.

This month’s hike had been widely anticipated by the markets, although they had priced in a 16% likelihood of no rate hike happening.

While some believed that in the face of numerous bank failures this month, which were partly induced by cratering bond prices spurred by rising rates, the Federal Reserve might flinch.

Others however argued that through its Bank Term Funding Program, the Fed has enacted a de facto “pivot”, which helps inject billions of dollars back into the economy without technically using quantitative easing.

And as stated by the central bank, “The Committee anticipates that some additional policy firming may be appropriate to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”

Featured Image Source: NewsBTC