Last night the Federal Reserve decided to cut interest rates by 50 basis points. This is the first rate cut by the Federal Reserve in 4 years!
This is both unexpected and reasonable. After all, according to market survey expectations, the probability of a 50 basis point rate cut has risen to 60%. This is always the way the Federal Reserve controls market expectations.
It is said that a 50 basis point rate cut shows that the fundamentals are not very good. In fact, the trading recession is a bit too large a cycle. It may not be possible to achieve a market trend like 312 even after half a year. Then, through the Fed’s monetary policy and market expectations, it may not come even after the Bitcoin bull market is over.
The Fed will cut interest rates two more times in 2024, according to the latest FOMC projections, and most officials expect the central bank to cut interest rates by a total of 100 basis points this year.
Interest rates are expected to fall further in 2025, with a forecast value of 3.4%, and long-term interest rates bottoming out at 2.9%.
That typically helps stimulate markets as traders tend to allocate to risky assets on the prospect of a return to easy monetary policy.
Bull market restart:
Ethereum founder Vitalik Buterin shared his vision for the development of Ethereum in the next decade. Vitalik said that the main goal of Ethereum is to maintain its core values of decentralization and open source while meeting the needs of the mainstream market. He proposed six major areas that need to be focused on in the future, namely:
1. Improve wallet security;
2. Improve the user experience of decentralized social media;
3. Promote the development of payment tools;
4. Strengthen privacy protection technology;
5. Expand the application of zero-knowledge proof (zk) in social media;
6. Improve the efficiency of Ethereum Layer 1.
Vitalik emphasized that Ethereum will continue to work on these aspects in the next decade so that it can maintain its core concept of decentralization while meeting mainstream adoption.
Rate cuts don’t immediately predict a recession
First, we need to understand that the Fed usually raises interest rates to control inflation and cool the economy, while it cuts interest rates to prevent a recession and increase market vitality and economic resilience by injecting funds.
Historically, in previous interest rate cut cycles, the Federal Reserve, due to lack of experience, often took action only after the economy had shown signs of recession, which led to the public's lack of confidence in its ability to regulate the economy.
This lack of confidence may have exacerbated the economic recession and market panic before and after the rate cut.
However, today's Federal Reserve is no longer the same.
It has extensive experience in macroeconomic regulation, including interest rate hikes and cuts, and the public has greater confidence in its capabilities. Coupled with the strong performance of economic data such as non-farm payrolls and CPI in recent months, if the Fed decides to cut interest rates this month, it may be interpreted by the market as a timely preventive measure rather than a signal of recession.
So while a rate cut is often viewed as a sign of concern about the economic outlook, in the current economic environment it is more likely to be an effort to keep the economy growing steadily and healthy rather than signaling the start of a recession.
