The Federal Reserve of the United States, which acts as a Central Bank in the region, has issued another warning regarding the falling graph of the economic activity in the country. To curb the impact of the consequently increasing unemployment rates and the exponentially high prices in the country, the chairperson of the Federal Reserve is planning to raise the interest rates by an additional 0.75%.
As per the latest statement issued by the Federal Reserve, the interest hike is a 3-quarter percentage increase in the interest rates. With the latest announcement, the Federal Reserve will hike its interest rates to this level for the first time since 1994. With the stocks of the companies plunging to the lowest levels in months, many companies are opting for downsizing.
Some financial market experts suggest that despite the consequences of the interest rate hike, the economic activity of the United States has started to return to its normal pace after the first quarter of the ongoing year. As per the remarks of the Federal Reserve after the latest meeting on the matter of budget, the ratio of job gain has started to replenish once again.
Furthermore, Fed Chairperson Jerome Powell claimed that the PCE price mark rose by 6.3%, while during the 12 months, inflation rates increased by 2%. As per Powell, the price of volatile food items and energy products remained inconsistent. Meanwhile, the equity market performance also experienced a drop as per the Federal Open Market Committee report that noted that S&P 500 index lost 0.5% while the NASDAQ lost 0.2%.
Federal Reserve Policies and Investment Markets
Josh Olszewicz is the head of Valkyrie products who recently claimed that the equity and the crypto market have already started to reflect the negative impact of the interest rate hike announcement of the Federal Reserve. He further explained that in anticipation of the volatility and uncertainty ahead, the stakeholders are bracing themselves for an interest hike of 2.75% to 3%.
He also pointed out that the latest value shedding of Ethereum and Bitcoin is a direct result of the currency market conditions. He noted that thus far, cryptocurrencies have accepted a considerable amount of economic impression from the US financial markets. Last month, Powell claimed that the Fed would raise around 50 points in June and July; however, now, the Central Bank is opting for a hike of 75 basis points.