Fed delivers first rate hike since 2023; Bitcoin spikes to $76,000

CoinDesk reported that the Federal Reserve on Wednesday lifted the federal funds target range by 25 basis points to 3.75%–4%, its first increase since 2023. Bitcoin briefly jumped to about $76,000 after the decision, while the broader crypto market stayed under pressure. Markets had largely anticipated the move. CME's FedWatch showed traders had assigned a 93% probability to a 25-basis-point hike ahead of the meeting, up from below 50% a month earlier. All 12 voting members of the Federal Open Market Committee backed the decision. In its statement, the Fed said U.S. economic activity continues to expand at a solid pace and job gains are broadly aligned with labor supply, while inflation remains elevated. The central bank said the hike is intended to return inflation to its 2% target more quickly, with rising oil prices adding to inflation pressures. Recent data strengthened the case for tightening. The Producer Price Index rose 5.4% year over year in August, accelerating from 4.8% in July. Goods prices increased 1.1% month over month, driven primarily by higher energy costs. The Consumer Price Index rose 3.4% year over year, unchanged from July, but the monthly increase quickened to 0.4% from 0.1%. Core CPI, excluding food and energy, edged up to 0.3% month over month from 0.2%. Oil has rebounded above $100 a barrel, further intensifying inflation concerns. Bitcoin traded in a tight range around the decision, moving between $75,000 and $75,800 before briefly touching $76,000. The broader cryptocurrency market fell about 2.18% on the day. The report noted Bitcoin had previously pulled back from a September peak near $82,000. In Washington, the U.S. Senate's failure to advance a procedural vote on the Clarity Act also weighed on sentiment. The Fear & Greed Index slid to 51 from 69 the prior day. Attention now turns to the Fed's October 27'28 and December 8'9 meetings for guidance on the updated rate path and whether this move marks the final tightening of the year. At the July meeting, the Fed held rates steady in a 9'3 vote, with several officials favoring an increase. Stronger-than-expected August employment data later nudged the committee toward a more restrictive stance.