📉The Federal Reserve cuts interest rates by 25 basis points, in line with market expectations; Powell's hawkish remarks lead to a market decline
The Federal Reserve, in its latest interest rate decision, has cut rates by 25 basis points as expected, bringing the target range for the federal funds rate down to 4.25%-4.5%, in line with market expectations. This rate cut marks the third consecutive meeting where the Federal Reserve has announced a rate cut, bringing the total cut for the year to 100 basis points.
In its statement, the Federal Reserve mentioned that recent economic data shows steady growth in economic activity, a slight easing in the labor market, an increase in the unemployment rate but still at a low level, and inflation close to the target but slightly rising.
The Federal Open Market Committee aims for an inflation target of 2%. To support these goals, the committee will continue to reduce its balance sheet, a plan that received majority support from its members, although Cleveland Fed President Beth Hammack (a 2024 FOMC voter) expressed opposition, arguing that interest rates should be maintained at 4.5%-4.75%.
The dot plot from the Federal Reserve indicates that two rate cuts are expected in 2025, down from four in the September forecast, while inflation is expected to reach the 2% target level by 2027, delayed from the previously anticipated 2026.
This suggests that the Federal Reserve will reassess the magnitude and timing of future rate cuts, carefully evaluating based on the latest data, evolving outlooks, and the balance of risks.
Meanwhile, Federal Reserve Chairman Powell stated at a press conference that the Federal Reserve is not permitted to hold Bitcoin and does not expect changes to related laws. Following these remarks, the US stock market immediately reacted with a decline. At the close of the market, the Dow Jones index fell by 2.58%, the Nasdaq index dropped by 3.56%, and the S&P 500 index decreased by 2.95%.
Additionally, the entire cryptocurrency market was also significantly affected. According to Coinmarketcap data, in the past 24 hours, BTC fell by 5.71%, and Ethereum dropped by 7.27%.
This indicates that the market is sensitive to Powell's remarks, and investors are closely monitoring changes in the Federal Reserve's policies and regulatory stance.
