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% to 4.75% on Thursday. The decision comes on the heels of similar rate cuts by other major central banks and just days after Donald Trump’s resounding victory in the U.S. presidential election.
“Over the year to date, labor market conditions have broadly improved further and the unemployment rate has moved up but remains low,” the Fed said in a statement. “Inflation has gotten closer to the Committee’s 2% objective but remains somewhat elevated.”
Earlier today, the Bank of England also cut interest rates by a quarter percentage point, while Sweden’s Riksbank slashed its key interest rate by half a percentage point. The coordinated moves signal a growing consensus among policymakers that additional monetary stimulus is needed to support fragile economies.
Powell Downplays Trump Impact, Bitcoin Hits New High
In his first public remarks since Trump’s landslide win, Fed Chair Jerome Powell insisted that the election outcome would have “no effect” on the central bank’s near-term policy stance, dispelling concerns of a potential hawkish surprise.
Some observers had speculated that Trump’s proposed measures like tax cuts, tariff reductions and deregulation to boost economic growth could reignite inflationary pressures, prompting the Fed to take a more cautious approach.
Powell noted that monetary policy remains restrictive even with today’s easing, but downside risks to economic growth have diminished following the Fed’s 50 basis point cut in September. He also said he would not resign if asked to do so by Trump, and that his firing or demotion “is not allowed by law” in response to reporter questions.
Following Powell’s remarks, the price of Bitcoin (BTC) hit a fresh record high of $76,951 before paring some gains, still up 1.6% over the past 24 hours. The broad market CoinDesk 20 index outperformed, gaining 4.5% over the same period. U.S. stock indexes also reached session highs, with the S&P 500 and tech-heavy Nasdaq rising 0.8% and 1.5% on the day respectively.
“The expectation that the Fed will pause its rate hike cycle at the upcoming December meeting fell to 28% from 33% before the meeting, the CME FedWatch tool showed.”
Markets Brace for New Economic Landscape
While the Fed’s latest move was widely expected, Powell’s comments did little to clarify the longer-term outlook for rates and inflation. Much will depend on the economic agenda pursued by the incoming Trump administration and Republican-controlled Congress.
Sweeping tax cuts, increased infrastructure spending, renegotiated trade deals and extensive deregulation have the potential to significantly boost growth and inflation. That in turn could force the Fed to resume rate hikes sooner and at a faster pace than currently anticipated by markets.
At the same time, elevated economic uncertainty, geopolitical risks and a stronger U.S. dollar could act as headwinds for the economy and complicate the Fed’s job. How these opposing forces net out will be a key focus for investors in the months ahead.
Bitcoin’s Emerging Role as Hedge Asset
Bitcoin’s surge to new highs in the face of election-related uncertainty and a dovish Fed highlights its growing appeal as a hedge against economic and political risks. Many investors view the decentralized digital currency as a safe haven detached from government interference.
- Bitcoin has gained over 120% year-to-date, vastly outperforming traditional assets like gold, bonds and stocks
- Growing institutional adoption is boosting Bitcoin’s credibility as an investable asset class
- Bitcoin’s fixed supply is seen as a bulwark against currency debasement amid ultra-loose monetary policies
While it remains to be seen if Bitcoin can sustain its momentum, it’s clear that the cryptocurrency is benefiting from the shifting economic and political tides. As the Fed and a new U.S. president steer a course through uncharted waters, Bitcoin may cement its role as a twenty-first century safe haven.
Following Powell’s remarks, the price of Bitcoin (BTC) hit a fresh record high of $76,951 before paring some gains, still up 1.6% over the past 24 hours. The broad market CoinDesk 20 index outperformed, gaining 4.5% over the same period. U.S. stock indexes also reached session highs, with the S&P 500 and tech-heavy Nasdaq rising 0.8% and 1.5% on the day respectively.
“The expectation that the Fed will pause its rate hike cycle at the upcoming December meeting fell to 28% from 33% before the meeting, the CME FedWatch tool showed.”
Markets Brace for New Economic Landscape
While the Fed’s latest move was widely expected, Powell’s comments did little to clarify the longer-term outlook for rates and inflation. Much will depend on the economic agenda pursued by the incoming Trump administration and Republican-controlled Congress.
Sweeping tax cuts, increased infrastructure spending, renegotiated trade deals and extensive deregulation have the potential to significantly boost growth and inflation. That in turn could force the Fed to resume rate hikes sooner and at a faster pace than currently anticipated by markets.
At the same time, elevated economic uncertainty, geopolitical risks and a stronger U.S. dollar could act as headwinds for the economy and complicate the Fed’s job. How these opposing forces net out will be a key focus for investors in the months ahead.
Bitcoin’s Emerging Role as Hedge Asset
Bitcoin’s surge to new highs in the face of election-related uncertainty and a dovish Fed highlights its growing appeal as a hedge against economic and political risks. Many investors view the decentralized digital currency as a safe haven detached from government interference.
- Bitcoin has gained over 120% year-to-date, vastly outperforming traditional assets like gold, bonds and stocks
- Growing institutional adoption is boosting Bitcoin’s credibility as an investable asset class
- Bitcoin’s fixed supply is seen as a bulwark against currency debasement amid ultra-loose monetary policies
While it remains to be seen if Bitcoin can sustain its momentum, it’s clear that the cryptocurrency is benefiting from the shifting economic and political tides. As the Fed and a new U.S. president steer a course through uncharted waters, Bitcoin may cement its role as a twenty-first century safe haven.
