Fed lifts rates by 25 bps to 3.75%–4.00%; Bitcoin pops briefly then steadies

According to CoinDesk, the Federal Reserve on Wednesday raised its benchmark interest rate by 25 basis points, taking the target range to 3.75%–4.00%. The decision was unanimously approved by the Federal Open Market Committee and marks the first rate increase since 2023, underscoring a renewed focus on bringing inflation under control. Bitcoin initially jumped after the announcement before easing back to around $75,500. Price swings were limited, and the token ended the day down about 0.5%. After the meeting, Federal Reserve Chairman Kevin Warsh said the U.S. economy "has indeed strengthened," while stressing that inflation remains the more urgent concern. He did not comment on how President Donald Trump might view the move, despite Trump's repeated calls for rate cuts, and instead reiterated the Fed's commitment to restoring price stability. Markets had largely priced in a 25-basis-point hike ahead of the meeting, helping keep the reaction muted. Higher rates typically raise borrowing costs, weigh on spending, and make risk-free assets more attractive, often pressuring valuations for risk assets such as stocks and Bitcoin. The Fed's updated projections also leave room for one additional hike before year-end. If realized, a high-rate backdrop could continue to weigh on risk assets. Warsh also touched on artificial intelligence, noting a longstanding interest in the topic while emphasizing that AI policy is outside the Fed's mandate. The central bank is focused on AI's implications for demand, productivity, and employment. The Fed said it formed five internal task forces earlier this year, including one dedicated to AI's impact on productivity and jobs rather than the technology's broader risks.