The United States Federal Reserve (Fed) postponed, this Wednesday, January 26, the increase in interest rates in that country. The announcement will be made in March, as a measure with which they plan to reduce inflation, which in December closed at its highest level in almost 40 years.
In a statement, the Federal Open Market Committee of the Fed stated that, together with the increase in rates, they intend to put a stop to bond purchases in the third month of 2022, before promoting a significant reduction in its asset holdings.
This means that the interest rate in the United States remains between 0 and 0.25%, following the cut announced in March 2020, when the pandemic was just beginning.
Thus, the agency seeks to increase the interest rate to influence prices and curb demand. Remember that a higher interest rate, increases the price of credit to individuals and companies.
Bitcoin price rose after Fed decision
After the decision of the Federal Open Market Committee of the Fed was known, the price of bitcoin (BTC) reacted positively, rising to US$39,000, according to data from CoinGecko. Although shortly after it had a correction that took it to US $ 37,000.
The rise is estimated at 3.02%, compared to yesterday’s price. The news is good for the first cryptocurrency, which since January 21 combat a downtrend which led it to be quoted close to US$ 35,000. The fall has been related to investors’ fear of an interest rate hike that the Fed was expected to announce on January 26.
The rest of the market also rose, along with bitcoin, as usual, on the significant influence of the pioneering cryptocurrency that now looks headed for $40,000, again.
Committed to stabilizing prices
Shortly after the statement was released, Fed Chairman Jerome Powell gave a press conference where he discussed the Committee’s decision.
From your appreciation, are still waiting for the US inflation declines “over the course of the year.” He suggested that they understand that high inflation “imposes significant hardship, especially on those least able to meet the higher costs of essentials such as food, housing and transportation.”
“In addition, we believe that the best we can do to support continued gains in the labor market is to promote a prolonged expansion, and that will require price stability,” the official suggested.
He added that the Fed is “committed to the objective of stabilizing prices,” for which they will use “tools both to support the economy and a solid labor market, and to prevent higher inflation from taking hold.”
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