Fed rate hike lands at 4%—What it means for Bitcoin and crypto

The US Federal Reserve has raised interest rates by 25 basis points, taking its target range to 3.75%–4.00%.

Crypto assets did not really react to the news. Bitcoin prices were slightly up and Ethereum slightly down, as the Fed’s revised forecast implied an extended period of high borrowing costs for risk assets well past this year, perhaps even into 2027.

Fed turns its attention back to inflation

This was the first rate hike since 2023, and the Federal Open Market Committee approved the increase unanimously.

Fed Chair Kevin Warsh commented on the strengthening of the economy, because of which officials had left rates untouched in July. He added that consumer spending and related business investment had been resilient and that the labour market continued to operate close to full employment.

The strength of the labour market has enabled the Fed to put the focus back on inflation, which is still above its 2% target.

The plain fact is that inflation is too high and has been for too long.

While acknowledging the Fed couldn’t do anything about the energy or food prices, Warsh said they could try to stop it from spreading across the rest of the economy.

The Fed said it expected inflation to average 3.7% in 2026, then 2.3% the next year and would not return to 2% until 2029.