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November 29, 2022
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Bitcoin Price Rises to $50K as Fed Makes Statement

Bitcoin quickly turned green as the Fed announced a quicker withdrawal from its asset purchase programs and likely interest rate hikes in 2022

The Federal Reserve said in a statement on Wednesday, Dec. %. The Central Bank has decided to double the pace of reduction in asset purchases and will now cut $30 billion a month from a previous rate of $15 billion.

The Fed expects to halt asset purchases in mid-March, months ahead of its previous expectations. The Central Bank will not raise interest rates until that happens, but predicts three rate hikes in 2022. Bitcoin, which was in negative territory shortly before the announcement, quickly surged to $49,500. As of this writing, BTC is trading above $48,750.

“The economy is much stronger now,” Fed Chair Jerome Powell said in his post-meeting conference call, justifying the committee’s decision. “Inflation is well above target and growth is well above potential.”

Powell added that the central bank would use its tools to prevent higher inflation from taking root in the economy and expects inflation to fall closer to its target by the end of next year. He reiterated that a healthier job market and high inflation mean the economy is growing strong and no longer needs the Fed’s accommodative policies.

The Fed will keep the target range for the federal funds rate between zero and 0.25%. Powell said the central bank will only raise rates after asset purchases have stopped. When asked why not stop buying now rather than in a few months, Powell said, “It’s best to take a careful approach to making adjustments,” citing how global markets are interconnected and how they move based on changing expectations. , not the change itself.

Financial markets were fearful ahead of the Fed’s monetary policy resolution. Concerns that policymakers would take a more aggressive stance than expected caused many assets to trade lower in the early days of the week. Failure to heed such upheavals has led to fear being wiped out of the market and indices and assets across the world to trade on the green. Bitcoin was no different and started to recoup most of the losses suffered on the day.

Powell also commented on Bitcoin and cryptocurrency when asked if he anticipated any risks emerging from such assets. The Fed chief responded that the central bank does not see Bitcoin and cryptocurrency threatening the stability of the US financial system, adding that stable coins are of special interest to the central bank as they “can be useful”.

Source: Bitcoin Magazine

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