Crypto rallies through the Fed's first rate increase since 2023
Crypto markets rallied following the Federal Reserve's decision to raise interest rates by 25 basis points. While the rate hike was expected, the Fed's 'dot plot' forecast suggesting a pause in aggressive tightening boosted investor sentiment across risk assets.
Why it matters
The market's reaction signals a shift in investor confidence regarding future monetary policy and the potential end of the current interest rate hiking cycle.
The Federal Open Market Committee voted to lift the target rate by 25 basis points to 3.75%-4%. Chair Kevin Warsh told reporters that inflation had been "too high … for too long" and that recent months’ readings did not suggest underlying trends had meaningfully improved.
What reassured traders was the committee's “dot plot” forecast, with a median policy rate of 4.1% at the end of both 2026 and 2027, implying just one further 25 basis-point move and no sustained tightening cycle.
Risk assets rallied, with the Dollar Index losing 0.17% while Nasdaq 100 index futures gained 1.04%, S&P 500 futures 0.81%, gold 1.02% and silver 1.52%. The two-year Treasury yield slipped 2 basis points to 4.71% after touching the highest level since 2024 in the previous session.
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