On Thursday, the US Federal Reserve lowered its benchmark federal funds rate by 25 basis points, bringing it to a range of 4.5%-4.75%. This move aligns with the broader trend among central banks, including the Bank of England and Sweden’s Riksbank, which also eased their monetary policies earlier in the day.
In its press release, the Federal Reserve noted that “labor market conditions have generally eased since earlier in the year,” with the unemployment rate rising slightly but remaining low. While inflation has made progress toward the Committee’s 2% target, it continues to be elevated. Despite this, the Fed emphasized that monetary policy remains restrictive, even after today’s cut, reflecting the central bank’s cautious stance in the face of economic uncertainty.
Fed Chair Jerome Powell, speaking publicly for the first time since Donald Trump’s victory in the US elections, dismissed concerns that the election results would influence the Fed’s decision-making in the near term. Powell stated that the election outcome would have “no effect” on the Fed’s policy trajectory, reassuring markets and quelling fears of a sudden hawkish shift. Some analysts had speculated that the new president-elect’s proposed economic policies—such as tax cuts, tariffs, and deregulation—could trigger inflationary pressures, prompting the Fed to adjust its stance. However, Powell emphasized that the risks to economic growth have diminished since the Fed’s September 50-basis point cut.
In his remarks, Powell also responded to questions about his position, affirming that he would not resign if asked by President Trump, and reiterating that firing or demoting him is “not permitted under the law.”
Following Powell’s statement, Bitcoin (BTC) reached a new record high of $76,951 before retreating slightly. The cryptocurrency remained up 1.6% over the past 24 hours. The broader CoinDesk 20 Index also outperformed, gaining 4.5% during the same period. US stock markets surged, with the S&P 500 rising 0.8% and the Nasdaq climbing 1.5% by the end of the trading day.
Despite the Fed’s dovish move, expectations for a rate pause at the upcoming December meeting declined, with the likelihood of such a pause now standing at 28%, down from 33% prior to the decision, according to the CME FedWatch Tool.
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