The Federal Reserve cuts interest rates by 25 basis points, Bitcoin hits an all-time high, Powell says Trump's election victory does not affect policy
Federal Reserve Chairman Powell may shake up the market today. Trump won the election, and everyone is now guessing how the central bank will adjust monetary policy and view inflation next.
On the morning of November 8, 2024, the Federal Reserve followed other central banks and lowered the benchmark federal funds rate by 25 basis points, now between 4.5% and 4.75%. They said the labor market has eased a bit, the unemployment rate is low but has increased slightly, and inflation is heading towards the 2% target, but it is still a bit high.
On the Bitcoin side, trading volume is increasing, and the price has surged to over $64,000, with gold prices also rising sharply. The ETH/BTC ratio has dropped to its lowest since April 2021. Some people are starting to worry whether Bitcoin can continue to rise.
The Bank of England and the Swedish central bank also cut interest rates today, one by 25 basis points and the other by half a percentage point.
Powell spoke for the first time after Trump's election victory, stating that the election results do not affect the Fed's short-term policy, which eased everyone's concerns about a sudden hawkish policy.
However, some believe that the new president's tax cuts and tariff relaxation policies might bring inflation back, and the Federal Reserve needs to be cautious. But Powell said that although the policy is now somewhat loose, monetary policy is still restrictive, and since the 50 basis point cut in September, the risk of economic growth has decreased a bit. He also stated that even if Trump wants him to leave, he will not resign because dismissal or demotion is not legally permitted.
After Powell's speech, the price of Bitcoin surged to an all-time high of $76,951, although it slightly retreated afterward, it still rose by 1.6% within 24 hours. The CoinDesk 20 index also performed well, rising by 4.5%. The US stock indices also reached new highs, with the S&P 500 index and the Nasdaq index increasing by 0.8% and 1.5%, respectively.
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