The Federal Reserve raised interest rates by 25 basis points on Wednesday, lifting the federal funds rate, the benchmark overnight rate that anchors borrowing costs across the economy, to a target range of 3.75% to 4% from 3.50% to 3.75% — its first hike since 2023. The decision was approved unanimously, with all 12 members of the Federal Open Market Committee and all Fed Governors backing the move.

Bitcoin spiked briefly in the minutes after the decision. The asset traded flat ahead of and immediately after the announcement, swinging between $75,000 and $75,800, before climbing to $76,000, where it continued rising. The broader crypto market lost around 2.18% on the day.

The move landed almost exactly as markets expected. Traders had priced in a 93% chance of a hike heading into the decision, according to CME's FedWatch tool, up from under 50% a month earlier.

In its statement, the Committee said economic activity was "expanding at a solid pace" and that job gains had "kept pace with the workforce," but that inflation remains elevated. It said Wednesday's move would support a "timelier return" to its 2% target.

The decision followed through on what a Wall Street Journal survey published this week found: nearly every major bank expected a hike, with most — including Barclays, Citigroup, JPMorgan, Morgan Stanley and UBS — forecasting 50 basis points of total tightening by year-end. Bank of America, Deutsche Bank and RBC had called for 75 basis points.

Why the Fed moved

The case for the hike hardened quickly after last week's inflation data. The Producer Price Index rose 5.4% annually in August, accelerating from 4.8% in July, with goods prices alone jumping 1.1% on the month — more than three-quarters of it driven by rising energy costs, according to the National Association of Manufacturers (NAM).

The Consumer Price Index followed a day later: prices rose 3.4% annually, the same pace as July, but the monthly gain accelerated to 0.4% from 0.1%, with gasoline responsible for a third of that increase. Core inflation, which excludes food and energy, picked up to 0.3% monthly from 0.2%.

That one-two punch pushed holdouts off the fence. Goldman Sachs and Piper Sandler, among the banks that had projected the Fed would stand pat, switched to expecting a hike after the reports landed, Reuters reported. Oil trading above $100 a barrel for the first time since July — tied to the fallout from the conflict with Iran — added further pressure the Fed could not easily wait out.

The Fed had held rates steady at 3.50% to 3.75% in July, but that decision passed by just a 9-3 vote, with three policymakers already pushing for a hike at the time. That internal split, combined with a stronger-than-expected August jobs report, tilted the committee toward tightening.

The Trump-Warsh collision

The hike puts Fed Chair Warsh in an uncomfortable spot. Wednesday's meeting was only his third since being confirmed in May, and it delivers close to the opposite of what Trump said he wanted when he picked him. "I'm going to put somebody that wants to cut rates," Trump told reporters last year before nominating Warsh. He also encouraged Warsh to be "independent."

Warsh ended up delivering both what Trump expected and what he did not: a fully independent central bank that raised rates anyway.

Sen. Elizabeth Warren, a longtime critic of Warsh's independence from the White House, told CNN that Trump's own Iran conflict and tariff policies had backed the Fed chair into a corner, forcing him to choose between the administration and controlling inflation. She argued a hike would still cost ordinary families through pricier credit card debt and mortgages regardless of which way Warsh went, and said it would take more than one decision to change her view of him.

Trump, Vice President JD Vance and Treasury Secretary Scott Bessent had all publicly pushed for cuts in the two weeks before the decision, with Trump going as far as threatening to halt trade with countries running surpluses with the U.S. if rates didn't come down.

What it means for Bitcoin and altcoins

Fed rate decisions are among the most closely watched macro events in crypto because the federal funds rate helps set dollar liquidity and funding costs across risk assets. The crypto market entered the decision already under pressure. Bitcoin traded around $75,200 in the hours before the announcement, well off its September peak near $82,000 and still absorbing Tuesday's drop after the Clarity Act failed its Senate cloture vote — a setback for the market-structure bill that would spell out which U.S. regulators oversee digital assets.

Analysts had flagged a support band between roughly $73,500 and $75,600 as the line in the sand, with a daily close below it opening the door to $71,000, and even $66,900 on some technical models — a move that would unwind the golden cross, the bullish chart signal formed when a short-term moving average crosses above a long-term one, that triggered Bitcoin's summer rally.

Bitcoin tested that zone directly on the announcement, spiking toward $75,900 before reversing to roughly $75,100 within minutes, ultimately holding above the lower end of the support band rather than breaking it outright.

The Crypto Fear & Greed Index is back at neutral levels, falling to 51 points from 69 yesterday after reaching extreme greed a few weeks ago.

The Fed's next meeting is scheduled for October 27-28, with its following gathering — and the next dot-plot update — set for 8-9, when Wall Street will find out whether Wednesday's hike was the last of the year or the first of several.