Fed Raises Rates to 4%, 16 Policymakers Expect Further Increase

The Fed increased its benchmark rate by 25 basis points on Wednesday, bringing the target band to 3.75%-4.00%. The decision was unanimous among the 12 voting members and marked the first rate rise since 2023.

Accompanying projections surpassed the action. Sixteen out of 18 officials anticipate at least one additional rate increase before year-end.

The Statement Dropped Its Explanation for Inflation

The language shifted more than the rate itself. In its July statement, the Fed attributed some high inflation to supply disruptions in energy and other sectors. That phrasing has been removed.

A new statement took its place. Wednesday’s increase will support a “timelier” return to the 2% target. The standard pledge that the committee will achieve price stability remained unchanged.

Policy-makers also upgraded their view of business spending and replaced a mention of the Middle East conflict with a reference to wider geopolitical events.

Projections Show 16 Officials Want Another Hike

The dot plot, which records each policymaker's rate expectations, shifted decisively hawkish.

Core PCE inflation, the Fed's favored measure, was projected at 3.4% for December 2026 and 2.5% for the following year. Unemployment estimates were lowered to 4.1% for both periods, down from 4.3%.

In June, BeInCrypto noted that nine officials had diverged from the consensus. That number has now almost doubled.

Bitcoin Climbed While Gold Gave Up Gains

Bitcoin was trading around $75,700 following the decision, losing 0.7% over 24 hours. It spiked from about $75,350 to above $76,100 shortly after the news broke.

Gold moved in the opposite direction. Spot metal surged toward $4,368 before selling off sharply and stabilizing around $4,333.

The rate increase came during a week that was already negative for cryptocurrencies. Bitcoin and XRP fell following the Senate's rejection of the CLARITY Act, which would have clarified which US agency regulates digital assets, resulting in over $300 million in liquidated leveraged positions.

White House advisor Christopher Phelan cautioned against a rate increase this week, pointing to declining inflation numbers. Chair Kevin Warsh has not implemented any rate cuts since Powell's departure.

Market participants continue to anticipate another rate hike this year. The outcome of Warsh's press conference will determine if that expectation remains.