The Federal Reserve is expected to announce its interest rate decision at today's meeting. Most economists anticipate the Fed will cut rates by another 25 basis points, bringing the target range for the federal funds rate down to 4.25%-4.5%.
If the Federal Reserve cuts rates by another 25 basis points, the total reduction since September will reach 1%. Previously, the central bank cut rates by 0.5% in September and another 0.25% in November.
According to the CME FedWatch tool, there is currently a 95.4% chance that the Federal Reserve will cut interest rates by another 25 basis points, while the likelihood of maintaining the current rate is only 4.6%. This is a decrease from yesterday's approximately 98% expectation for a rate cut.
However, compared to last week, market expectations for a rate cut have increased, especially after the November inflation data met expectations and the employment data showed a strong recovery.
The U.S. Bureau of Labor Statistics (BLS) reported that the U.S. economy added 227,000 jobs in November, exceeding expectations and reflecting a recovery from the impacts of natural disasters and strikes. Strong job growth, particularly in healthcare and tourism sectors, contributes to a positive economic outlook, which may influence the Fed's interest rate decisions.
Last week, the BLS reported that the Consumer Price Index (CPI) rose 2.7% year-on-year in November, in line with expectations. Following this announcement, the likelihood of a rate cut in December rose to about 96%.
Inflation pressures have stabilized but have not yet reached target levels. The Federal Reserve is working to reduce inflation from a peak of 9.1% in June 2022 down to a target of 2%. Despite progress, the current level remains above the target.
LendingTree senior economist Jacob Channel stated that the Federal Reserve is likely to cut rates by another 25 basis points at the upcoming meeting, but further cuts in the near future may not occur. He also mentioned that changes in the economic policies of newly elected President Trump could lead to a rise in inflation or economic imbalances, in which case the Fed might pause rate cuts to assess their impact on the economy.
The cryptocurrency market is bracing for greater volatility as the Fed's interest rate decision approaches. Over the past 24 hours, BTC has fallen nearly 3%, and ETH has dropped 4%. The total market capitalization of cryptocurrencies currently stands at $3.8 trillion, down 4% from yesterday.
BTC has fallen from a high of $108,000 to $104,000, leading other altcoins such as XRP, SOL, DOGE, and BNB to also experience slight declines.
As this important event approaches, the market may become more turbulent.
Among the top 100 crypto assets, Pudgy Penguins' PENGU token has seen the largest drop of 55%, possibly due to selling pressure following an airdrop. This has led to a significant decline in both the token value and floor price of Pudgy Penguins NFTs.
[Disclaimer] The market is risky, and investment should be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Invest at your own risk.
