On September 16, the U.S. Federal Reserve (Fed) increased its key interest rate range by 25 basis points, bringing it to 3.75-4% annually.

The Federal Open Market Committee (FOMC) unanimously approved this move, aligning with market expectations. At the June meeting, only three members supported a rate hike, while the remaining nine voted to keep it unchanged.

This marks the first tightening of monetary policy by the Fed since July 2023, when under Jerome Powell’s leadership, the rate was raised by the same 25 basis points to a range of 5.25%-5.5%.

Current Fed Chair Kevin Warsh, in his opening remarks, reiterated a hawkish stance, stating that while the economy appears to be strengthening, overall financial conditions remain insufficiently robust. During the Fed’s symposium in Jackson Hole in August, he emphasized the central bank's commitment to achieving the inflation target of 2%.

The FOMC's press release also highlighted an increase in economic activity, improvements in labor productivity, and low unemployment rates. However, it noted negative factors such as uncertainty from geopolitical events and rising prices.

“Inflation remains high. Today's policy measures will contribute to a more timely return to the Committee's 2% target,” the statement read.

According to the U.S. Bureau of Labor Statistics, annual inflation in August held steady at 3.4%. The core Consumer Price Index (CPI), excluding food and energy prices, rose by 0.3% month-over-month, surpassing the expected 0.2%. Year-over-year, the figure slowed from 2.5% to 2.4%.

Sixteen out of the eighteen Fed participants project another rate hike by the end of the year.

In response to the regulator's decision, Bitcoin experienced a slight increase, gaining 1% over the day and stabilizing above $76,000.

15-minute BTC/USD chart from Binance. Source: TradingView.

The wider market followed suit, entering the "green zone" with a total capitalization increase of approximately 1% (CoinGecko).

It is worth noting that a setback on October 15 regarding procedural voting on the CLARITY Act led to a nearly 2% decline in Bitcoin's value.