Market participants wondered if the central bank would follow through with its previous intention of tightening monetary policy following recent bank failures. According to most market participants, the Federal Reserve increased its benchmark fed funds rate by 25 basis points to 4.75%-5%.

After the decision, bitcoin (BTC) rose about $250 to $28,700.

The Fed’s Federal Open Market Committee (FOMC) acknowledged the current financial system difficulties in their statement accompanying the recent rate hike, recognizing they may cause tighter credit conditions for individuals and businesses and lead to slower economic growth, hiring and inflation. Furthermore, recent policy statements have removed the language of “ongoing increases,” hence any further rate hikes are likely to be contingent on the data.

Interest rate traders were evenly divided two weeks ago over whether the Fed would raise interest rates by 25 or 50 basis points. After struggling within the banking system for several years – including the failure of several lenders – traders today are about evenly split on whether the Fed will raise rates by 25 basis points or stay the same, with some expecting the central bank to cut rates by surprise.

Participants see core PCE inflation at 3.6% in December 2023 versus 3.5% expected three months earlier, according to the Fed’s quarterly expectations report.

At 2:30 p.m. ET, Fed Chair Jerome Powell will hold a press conference.