The Federal Reserve of the United States announced a 0.25% rate cut yesterday, as expected. In the press conference held to announce the rate cut, Fed Chair Jerome Powell defended the decision, describing it as an effort to achieve a more balanced economic position. However, he revealed that the organization would take a cautious approach while considering further rate cuts. Yesterday, both the U.S. stock market and the cryptocurrency market experienced a severe decline.

The Federal Reserve's Rate Cut and Inflation Targets: What You Should Know

Yesterday, the interest rate set by the Federal Reserve of the United States was lowered to 4.5%. This marks the third major adjustment this year. Initially, on September 18, the interest rate was reduced to 5%. On November 7, the interest rate was lowered for the second time to 4.75%.

In the press conference, Powell emphasized the organization's commitment to supporting the economy and domestic labor markets. However, stressing that the organization has not decided on a tight plan regarding interest rate changes, he asserted that the possibility of further rate cuts depends on three main factors: new economic data, economic outlook, and risks to the economy and inflation.

At the beginning of this year, the inflation rate in the United States was 3.1%. It peaked at 3.5% in March. Notably, from March to September, it has been steadily decreasing. In September, it fell to its lowest point of the year at 2.4%. However, since then, the rate has been steadily increasing. By November, it reached 2.7%.

Market Reaction: Stocks and Cryptocurrencies Plummet

On December 18, the day the Federal Reserve officially announced the rate cut, the cryptocurrency market fell approximately 0.58%. At the beginning of yesterday, the price of Bitcoin was $106,080.05. By the time it closed, the price had dropped to a low of $100,207.97, marking a significant decrease of 5.85%. Similarly, the S&P 500 index also fell sharply by more than 2.90% yesterday.

Altcoins Face Greater Challenges

At the beginning of December 18, the total market capitalization of the cryptocurrency market excluding BTC was $1.53 trillion. By the time the market closed, it had dropped to a low of $1.42 trillion, marking a significant decline of 7.74%. Over the past 24 hours, Ethereum fell more than 4.7%, XRP dropped 6.8%, BNB decreased 1.6%, Solana dropped 3.3%, Dogecoin fell 6.2%, and Cardano declined 4.9%.

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