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Point of Focus
- The Federal Reserve raised interest rates by 25 basis points to 3.75%-4.00%.
- Fed’s new dot plot and rate projections could have a bigger impact on crypto than the decision itself.
- Bitcoin entered the decision near $76,000, with rising Treasury yields already putting pressure on crypto.
The Federal Reserve raised interest rates by 25 basis points on Wednesday, delivering its first increase since 2023 as policymakers respond to persistent inflation pressures.
The Federal Open Market Committee (FOMC) lifted the federal funds target range from 3.50%-3.75% to 3.75%-4.00%, matching the move overwhelmingly expected by financial markets ahead of the decision.
The decision was approved unanimously by a 12-0 vote.
The Fed said economic activity continues to expand at a “solid pace,” with resilient domestic spending, strong productivity growth and robust capital investment. It also said job gains have kept pace with workforce growth and the unemployment rate has changed little.
Inflation, however, “remains elevated,” with policymakers saying Wednesday’s rate increase would support a more timely return toward the Fed’s 2% target.
With the quarter-point increase already heavily priced in before the announcement, the bigger question for Bitcoin and other risk assets is what the Fed intends to do next.
BREAKING: The Federal Reserve officially hikes interest rates by 25 basis points, marking its first rate hike since July 2023.
This ends the longest Fed interest rate pause since 2008.
— The Kobeissi Letter (@KobeissiLetter) September 16, 2026
Bitcoin Reacts to Fed Rate Hike
Bitcoin was trading around $76,000 heading into the decision after falling roughly 4% Tuesday, while Ether was near $2,400 following an even steeper decline.
Immediately following the Fed decision, Bitcoin moved slightly, remaining just under $76,000, while Ether traded at $2,392.
Crypto markets entered the meeting under pressure from a sharp increase in Treasury yields as investors adjusted to the prospect of tighter monetary policy.
The US 10-year Treasury yield reached 5.041% on Sept. 15, its highest level since 2007, before easing. Federal Reserve data showed the 10-year yield rising from 4.80% on Sept. 8 to 4.97% on Sept. 14.
Higher yields can create a difficult backdrop for Bitcoin and crypto because investors can earn greater returns from comparatively lower-risk government securities, reducing the relative appeal of speculative and non-yielding assets.
The dollar’s reaction could also prove important. Higher expected US rates can support the greenback, another potential headwind for dollar-denominated assets such as Bitcoin.
Fed Dot Plot Signals Higher Rates for Longer
Because markets had assigned roughly a 93% probability to Wednesday’s quarter-point increase ahead of the meeting, the hike itself contained relatively little surprise.
The bigger development came from the Fed’s updated Summary of Economic Projections, which showed policymakers expecting substantially higher interest rates than they did three months ago.
The median projection for the federal funds rate now stands at 4.1% at the end of 2026 and 4.1% in 2027, before declining to 3.9% in 2028 and 3.6% in 2029. Policymakers put the longer-run rate at 3.2%.
That represents a significant upward revision from June. The previous projections showed rates at 3.8% in 2026, 3.6% in 2027 and 3.4% in 2028.
The projections therefore suggest Wednesday’s increase may not be an isolated move and that monetary policy could remain restrictive for considerably longer than previously anticipated.
That matters for Bitcoin because a higher expected path for interest rates can reinforce elevated Treasury yields and tighten broader financial conditions.
Fed Raises Growth and Inflation Forecasts
The Fed also revised its economic outlook.
Policymakers now expect real GDP to grow 2.3% in 2026, up from the 2.2% projected in June. Growth is forecast at 2.4% in 2027 and 2.2% in 2028.
At the same time, the unemployment outlook improved substantially. The median projection for the unemployment rate fell to 4.1% for 2026, 2027 and 2028, compared with June forecasts of 4.3%, 4.3% and 4.2%, respectively.
Inflation remains the more difficult part of the Fed’s mandate.
Headline PCE inflation is now expected to reach 3.7% in 2026, slightly above June’s 3.6% projection, before declining to 2.3% in 2027, 2.1% in 2028 and 2.0% in 2029.
Core PCE inflation is projected at 3.4% this year, up from the previous 3.3% forecast, before falling to 2.5% in 2027, 2.2% in 2028 and 2.0% in 2029.
The combination of stronger growth, lower unemployment and slightly higher near-term inflation gives policymakers more room to keep monetary policy restrictive while trying to bring inflation back toward target.
Fed confirms higher-for-longer interest
For crypto, that makes the future rate path particularly important. Higher-for-longer rates could continue to pressure liquidity and risk appetite, while any indication that inflation is cooling faster than projected could eventually shift expectations back toward easier policy.
“This move higher had been coming and the Fed arguably held it off for as long as they could. However, with energy prices taking a renewed step higher and inflation remaining persistently well above target, it was inevitable that the Central Bank would need to take this step.”
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