Cryptocurrency markets surge 10% after Fed rate cut
Cryptocurrency markets surged 10% last week, boosted by the US Federal Reserve's 50 basis point reduction in interest rates, the Fed's first rate cut in four years.
The federal funds rate was lowered from a target range of 5.25%-5.50% to 4.75%-5.00% in response to progress toward the Fed's 2% inflation target since its last meeting in July.
Bitcoin saw a 6% surge, reaching $64,000, a price level not seen since August 26 this year. Bitcoin spot price ETFs also saw $412 million worth of inflows last week.
Interestingly, the published dot-plot, which illustrates the Fed's estimates of long-term interest rates, showed that officials expect the federal funds rate to be in a target range of 4.25%-4.50% by year-end, 50 basis points below the current target range. This suggests that further rate cuts could be coming at the Fed's November and December meetings.
According to CME FedWatch, the market is currently forecasting a target range for the federal funds rate of 4.00%-4.25% by year-end, which would imply a reduction of 75 basis points from current levels.
The focus will be on Friday's Personal Consumption Expenditures (PCE) inflation data. The PCE is the preferred measure of inflation for the #Fed . A lower than expected figure could further boost markets in anticipation of even deeper interest rate cuts in the coming months.