In a widely anticipated move, the U.S. Federal Reserve lowered its benchmark federal funds rate by 25 basis points to a range of 4.5%-4.75% on Thursday. The decision comes on the heels of similar easing measures by other major central banks as inflationary pressures show signs of cooling.
“Labor market conditions have broadly softened and the unemployment rate has moved up but remains low,” the Fed said in its policy statement. “Inflation has made progress toward the Committee’s 2% objective but remains quite high.”
Across the Atlantic, the Bank of England also cut rates by a quarter point, while Sweden’s Riksbank went a step further with a half-point reduction.
Powell Downplays Trump WIN Impact
Federal Reserve Chair Jerome Powell, speaking publicly for the first time since Donald Trump’s decisive victory in the U.S. presidential election, asserted that the outcome would have “no effect” on the central bank’s near-term policy stance. His remarks helped allay concerns about a potential hawkish surprise.
Some analysts had speculated that the president-elect’s proposed policies, such as tax cuts, tariffs, and deregulation to boost economic growth, could reignite inflationary pressures and prompt the Fed to adopt a more cautious approach.
While acknowledging that monetary policy remains restrictive even with today’s easing, Powell noted that downside risks to economic growth have diminished since the Fed’s 50 basis point cut in September. When pressed by reporters, he also stated that he would not resign if asked to do so by Trump and that firing or demoting him “is not permitted by law.”
Bitcoin Hits New All-Time High
Following Powell’s remarks, the Bitcoin (BTC) price surged to $76,951, marking a fresh all-time high before pulling back slightly. The world’s largest cryptocurrency by market value was still up 1.6% over the past 24 hours. The broader market, as measured by the CoinDesk 20 index, outperformed with a 4.5% gain over the same period.
U.S. stock indices also reached session highs, with the S&P 500 and tech-heavy Nasdaq up 0.8% and 1.5% on the day, respectively.
“The Fed’s rate cut and Powell’s balanced comments have given both traditional and crypto markets a boost. Bitcoin’s record high suggests growing confidence in its role as a hedge against inflation and economic uncertainty.”
— Sylvia Jansen, Senior Analyst at Greyscale Research
Rate Hike Pause Expectations Dip
Expectations for the Fed to pause rate hikes at its next meeting in December fell to 28% from 33% before the meeting, as indicated by the CME’s FedWatch tool.
- Market pricing suggests a roughly 72% probability of another 25 basis point hike in December
- Further rate cuts are expected in 2025 as economic growth slows and inflation continues to moderate
- Central banks globally are shifting to a less aggressive tightening pace amid signs of cooling price pressures
As bitcoin and the broader crypto market react positively to the Fed’s latest move, analysts are closely watching for signs of a more dovish pivot in the months ahead. A sustained rally in risk assets like equities and cryptocurrencies could hinge on the path of inflation and the economy’s resilience in the face of higher borrowing costs.
