On September 18, 2024, the US Federal Reserve announced a 0.5% interest rate cut, from 5.5% to 5.0%, the first cut in four years. This decision came after a series of 11 consecutive interest rate hikes between 2022 and 2023 with the aim of combating rising inflation.
The Fed aims to boost the economy with this cut, especially with inflation slowing to 2.5%, and oil and gas prices declining. The decline in inflation and the slight increase in unemployment have boosted confidence that the market needs to ease monetary policy to further support economic growth.
The Federal Reserveâs interest rate cuts directly affect the cryptocurrency market. Typically, this leads to increased liquidity and optimism in the market. When interest rates fall, borrowing becomes less expensive, which boosts capital investment in riskier assets such as cryptocurrencies, as investors seek higher returns compared to traditional assets.
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