2024-12-19

Important News

2 hours ago

4E: Fed Slashes Rate Cut Expectations, Causing Global Market Collapse

BlockBeats News, December 19, according to 4E monitoring, the Federal Reserve announced a scheduled rate cut of 25 basis points on Wednesday, but significantly raised future policy rate expectations and inflation expectations, predicting only two rate cuts next year totaling 50 basis points, which is halved from previous expectations.

After the release of the Fed's dot plot and economic outlook summary, risk aversion

sharply increased, with all three major U.S. stock indices falling. The S&P 500 index closed down

2.95%, the Dow Jones fell 2.58%, marking its longest losing streak since 1974 with ten consecutive days of decline, and the Nasdaq closed down 3.56%. Tesla dropped over 8%, leading the decline among tech giants. Cryptocurrency concept stocks broadly declined, with MSTR down 9.52% and Coinbase down 10.2%.

The Fed’s actions caused the U.S. stock market to plummet, resulting in a significant correction in the crypto market. BTC fell below $100,000, and Powell's statement that “the Fed does not allow nor intends to hold Bitcoin” intensified selling pressure, with Bitcoin’s decline reaching 6.2%, reporting at $99,235 before the deadline. Ethereum briefly dipped to $3,542, down 7.27%, and altcoins generally experienced double-digit declines. In the past 24 hours, the total liquidation amount in the cryptocurrency market reached $842 million, deepening market panic.

In the foreign exchange and commodity sector, the Fed's drastic reduction in rate cut expectations caused the dollar index to rise over 1% to a two-year high; gold prices fell over 1% to a one-month low; a decrease in U.S. crude oil inventories pushed oil prices higher, but the slowdown in rate cuts dampened oil demand prospects, resulting in oil prices retreating gradually from earlier gains.

After the meeting announced a rate cut of 25 basis points to 4.25%-4.5% as expected, the Fed's published interest rate “dot plot” indicated that only two more rate cuts are expected by 2025, which is half the number of planned cuts compared to the September dot plot prediction, exceeding hawkish expectations, and the market is exhibiting extreme fear. Fed officials also anticipate two more rate cuts in 2026 and one more in 2027.