The Central Bank of America, The Fed, has not stopped raising interest rates by increasing the federal funds rate by 25 basis points.
Forbes reported that The Fed’s policy of raising interest rates has reached its highest level since February 2001, affecting various assets, including cryptocurrencies and stocks that do not pay dividends.
The financial media outlet reported that members of the Federal Open Market Committee (FOMC) have increased the target range for this benchmark interest rate, which has broader implications for borrowing costs, to between 525 and 550 basis points.
“According to Federal Reserve data, the midpoint of this range has reached its highest level since February 2001,” Forbes wrote in a recent article.
Furthermore, these highly visible policymakers have left the possibility open for the federal funds rate to rise even higher, stating that the Committee will continue to assess additional information and its implications for monetary policy.
“When determining the extent to which additional policy tightening may be warranted to return inflation to 2 percent over time, the Committee will consider the cumulative tightening of monetary policy, the time over which monetary policy has been affecting economic activity and inflation, and economic and financial developments,” according to the committee’s minutes.
Federal Reserve Chair Jerome Powell emphasized during a press conference that although inflation pressures have eased slightly in recent months.
Powell said that stakeholders working to control this price increase are still far from their goal of bringing core inflation to the 2 percent target.
Aggressive monetary tightening policies, along with asset sales, have contributed to upward pressure on borrowing costs, potentially affecting yields and investor incentives.
This development could pose challenges for cryptocurrencies and stocks that do not have regular income streams, as investors may seek higher yields from financial instruments that offer interest payments.
As the Committee continues to assess economic conditions, the implications of this interest rate hike on future monetary policy remain a subject of ongoing analysis. [ab]