[Digital Today reporter Yoonseo Lee] The U.S. Federal Reserve raised its benchmark interest rate by 0.25 percentage point. It was the first rate hike since 2023.

Decrypto, a blockchain media outlet, reported on Sept. 16 (local time) that the Fed raised the target range for the federal funds rate to 3.75 to 4.00 percent from 3.50 to 3.75 percent.

The decision largely matched market expectations. CME FedWatch showed the probability of a rate hike climbed to as high as 93 percent before the meeting. It was below 50 percent a month earlier, but forecasts shifted quickly as a string of inflation indicators came in strong. All 12 members of the Federal Open Market Committee supported the decision.

In a statement, the Fed said it sees economic activity expanding at a solid pace. It said employment increased in line with the pace of growth in the labor force, but judged that inflation remains elevated. The Fed said the move would help return inflation to its 2 percent goal.

The broader cryptocurrency market fell about 2.18 percent on the day. Bitcoin rose to around $75,900 immediately after the announcement, then slid back to around $75,100 within minutes, but held the lower end of a closely watched support zone of $73,500 to $75,600.

Recent inflation data underpinned the rate hike. The National Association of Manufacturers said the August producer price index rose 5.4 percent year on year, accelerating from 4.8 percent in July. Goods prices jumped 1.1 percent month on month, with more than three quarters of the increase driven by higher energy costs. The August consumer price index, released afterward, rose 3.4 percent year on year, unchanged from July, but the monthly increase widened to 0.4 percent from 0.1 percent. Gasoline accounted for one third of the monthly rise. Core inflation excluding food and energy also rose to 0.3 percent month on month from 0.2 percent.

Against that backdrop, major banks shifted to more hawkish forecasts. A Wall Street Journal survey released this week showed most large banks, including Barclays, Citigroup, JPMorgan, Morgan Stanley and UBS, expected a total of an additional 0.50 percentage point of tightening by year-end. Bank of America, Deutsche Bank and RBC forecast 0.75 percentage point. Goldman Sachs and Piper Sandler, which had previously expected rates to be held, also switched to calling for hikes after the inflation data.

The return of oil prices above $100 a barrel also added pressure. With energy-price pressures rising in the wake of conflict with Iran, conditions made it harder for the Fed to wait longer. The Fed held rates steady at its July meeting, but the vote was split 9 to 3, and three policymakers argued for a hike even then. A stronger-than-expected August jobs report also added weight toward tightening.

Political pressure also continued. U.S. President Donald Trump said last year, before nominating Kevin Warsh as Fed chair, that he would put someone in the job who wanted rate cuts, while also urging Warsh to maintain independence. Warsh, however, opted for a rate hike at his third meeting after taking office.

Senator Elizabeth Warren criticised on CNN that the Trump administration's Iran-related conflict and tariff policy had cornered the Fed. She said households would find it difficult to avoid the burden of rising credit card debt and mortgage costs whether rates are raised or held.

The cryptocurrency market had already been trending lower. Bitcoin traded around $75,200 for several hours before the announcement, well below its September high near $82,000. A day earlier it also faced downward pressure after the Clarity bill failed to clear a Senate cloture vote. The crypto fear and greed index slipped to neutral from extreme greed several weeks ago, and fell to 51 from 69 a day earlier.

The next Fed meeting will be held on Oct. 27-28. A dot plot will be presented at the Dec. 8-9 meeting, and markets are expected to again focus on whether the latest hike is the last move this year or the start of additional hikes.