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Alex Dovbnya

Bitcoin spiked to an intraday high after the announcement

Federal Reserve officials have decided to leave interest rates unchanged at a Wednesday meeting, keeping them between zero and 0.25%.

The Bitcoin price is up 3.4% on the news, reaching a new intraday high above the $49,000 on the Bitstamp exchange. Bulls now have the $52,000 resistance level in sight.     

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The Fed will maintain near-zero rates until full employment is achieved, according to a statement issued by its officials. During a press conference, Chair Jerome Powell said that it was unclear how much longer labor market shortages would last: 

The economy has been making rapid progress toward maximum employment. How long the labor shortages will persist is unclear, particularly if additional waves of the virus occur.     

The median forecast of the policymakers shows three rate hikes in 2022. Three additional hikes are expected to occur in 2023.

The central bank has also doubled the pace of bond purchase tapering by $30 billion per month.

Market observers were looking for signals of the Fed’s determination to decisively withdraw its economic support amid persistent inflation concerns. The central bank is on track to phase out the massive stimulus program, which many believe has propelled the prices of assets like Bitcoin, in March.  

Powell claims that the Fed won’t raise rates until the taper is over: 

We’re basically two meetings away, now, from finishing the taper.   

Notably, the Fed no longer uses the controversial word “transitory,” which has been criticized by former Twitter CEO Jack Dorsey and other pundits, in order to describe inflation.   

Last week, the consumer price index showed price rising at the fastest pace since 1982.

Powell says that this level of inflation is not consistent with price stability. 

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