Monday, January 17

Markets react higher to Fed measures to contain inflation

The price of bitcoin (BTC) registered a 6% rebound on Wednesday, December 15, after the announcements of the Federal Reserve (the Fed) of the United States about an acceleration of the reduction of aid, and a possible increase in the interest rates in 2022.

In a press release of this December 15, released at the close of the monthly meeting of the Federal Open Market Committee (FOMC), the Fed indicated that it would accelerate the reduction in the monthly purchase of bonds announced at the beginning of November. On that occasion, Fed Chairman Jerome Powel. I affirm that the 12.5% ​​reduction in monthly bond purchases would allow it to be brought to a minimum by June 2022.

Of $ 105 billion of monthly bond purchases announced in November, the Fed announced that they would be reduced to USD 60,000 million, starting next January. This represents an additional reduction of 42.8% in the purchase of treasury bonds, which is part of the Fed’s monetary expansion policies since March 2020, in response to restrictions related to the Covid pandemic. -19.

Although a cap of 0.25% is established for interest rates, among the FOMC resolutions it is contemplated that this committee prepares to adjust monetary policy “if risks emerge that could prevent the Committee’s objectives from being achieved.”

These measures, which would facilitate a progressive increase in interest rates, are aimed at trying to control inflation, which has risen to levels not seen in the United States for four decades.

The price of BTC rallied over 6% this Wednesday with the Fed’s announcement. Source: TradingView.

Last Friday, with the publication of the November consumer price index increase to almost 1%, it was revealed that inflation had reached 6.8%, the highest in four decades, as reported by CriptoNoticias.

After the Fed’s announcement, bitcoin registered a 6.42% rally on the afternoon of Wednesday, December 15, going from $ 46,600 to $ 49,512. At the time of this writing, bitcoin is trading at $ 48,890, according to the CriptoNoticias price index.

For his part traditional Wall Street indices also appreciated yesterday, with the announcement of the Fed, although to a lesser extent than BTC. Nasdaq rallied 3.14%, while the S&P 500 Index and Dow Jones appreciated 2% and 1.13%, respectively.