The U.S. Federal Reserve has raised interest rates by a half-percentage point for the first time since May 2000.

Bitcoin, the largest cryptocurrency, is up about 1% on the news, currently trading at $39,141 on the Bitstamp exchange. The crypto king has bounced together with stocks.  

The central bank’s aggressive monetary policy is aimed at combating out-of-control inflation, which recently reached the highest level in four decades.

As reported by U.Today, the Fed hiked the benchmark short-term interest rate by 25 basis points in March, but consumer prices persistently kept creeping up despite the fact that supply shortages moderated.

By making it more expensive to borrow money, the Federal Reserve expects to cool down the economy. 

The central bank’s hawkish U-turn has also taken some steam out of the cryptocurrency market. Bitcoin, Ethereum, and other leading cryptocurrencies have taken a beating this year together with stocks.      

Interest rate futures suggests a 94% chance of the Fed hiking the benchmark short-term borrowing rate to at least 2.75% by the end of the year. 

During his press conference, Powell said that inflation was “much too high” and “well above goal.” He claims that it is essential to bring consumer prices down to maintain a strong labor market. Further “surprises” could be in store, he said.              

Additional 50 basis point hikes will be on the table during the upcoming meetings, according to Powell. However, the central bank is “not actively considering” 75 basis point hikes at this point. 

America will be positioned to handle monetary tightening, Powell said.