The U.S. Fed announced a 25 basis point rate cut early this morning, marking the second consecutive rate cut since September, lowering the benchmark interest rate to 4.5% to 4.75%, in line with expectations, allowing the U.S. stock market and Bitcoin to maintain their upward momentum. Notably, this decision received unanimous consent from all officials, indicating that the Fed recognizes the necessity of lowering rates to avoid potential economic recession, pointing out that while the unemployment rate in the labor market has risen, it is still at a low level.
According to the statement, the Fed believes that recent economic indicators show that economic activity is steadily expanding. Labor market conditions have eased somewhat, with the unemployment rate rising slightly but still remaining low. At the same time, the inflation rate is gradually moving toward the 2% year-over-year target, but it is still slightly above the ideal level. In response, the Fed stated that it will strive to achieve full employment and a long-term inflation target of 2% for a soft landing.
The Fed believes that economic risks have remained broadly balanced over the past year. Given the uncertainty in the economic outlook, the Fed decided to lower the federal funds rate target range by 25 basis points. Whether further adjustments will be made in the future will depend on the latest economic data, changes in the outlook, and the balance of risks. The committee will also continue to reduce its holdings of U.S. Treasury securities, agency bonds, and mortgage-backed securities (MBS). After the U.S. rate cut, Bitcoin continued to rise, with prices briefly surpassing $76,000.
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"MICA Daily | Fed cuts rates again by 25 basis points, Bitcoin breaks $76,000" this article was first published on (Blockke).
