Key takeaways
- The Federal Reserve cut its benchmark interest rate by 25 basis points amid mixed economic signals.
- The crypto market saw declines, with Bitcoin falling 4% and Ethereum and Solana seeing larger losses.
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The Federal Reserve lowered its benchmark interest rate by 25 basis points to a target range of 4.25% to 4.5%, signaling a shift in monetary policy amid mixed economic signals.
That brings the interest rate down to one percentage point below where it was in September, when authorities began cutting rates.
The Federal Reserve’s updated economic projections show GDP growth at 2.5% for 2024 and a gradual decline to 2.0% by 2027.
The unemployment rate is expected to increase slightly to 4.3% in 2025, while inflation, as measured by the PCE index, is expected to reach 2.4% for 2024 and 2.5% for 2025, remaining slightly at -above the Fed’s 2% target.
The crypto market saw broad declines ahead of the Fed’s announcement as traders reduced their risk exposure.
The overall crypto market is down 5% over the past 24 hours, with Bitcoin falling 4% from its yearly high of over $108,000 hit yesterday.
Ethereum and Solana also saw declines, falling 5% and 6% respectively from their weekly highs of $4,100 for Ethereum and just under $230 for Solana.
President-elect Donald Trump’s upcoming policies on tariffs and deportations have added to the uncertainty, leading analysts to wait for those plans to come to fruition before predicting the Federal Reserve’s next moves for the year ahead. come.
However, many analysts predict fewer rate cuts in 2025, with projections currently suggesting only two rate cuts.
Since Trump’s victory on November 6, the “Trump trade” has materialized in the crypto market, with Bitcoin surging more than 50% and some altcoins gaining more than 200%.
Many traders expect this momentum to build further when Trump officially takes office.
However, Arthur Hayes, former CEO of BitMEX, suggested that reducing risks ahead of Trump’s inauguration may be the best solution, in anticipation of a possible “sell the news” event.
Fed Chairman Jerome Powell is expected to hold a news conference following the Fed’s rate cut announcement to provide additional details and guidance on the central bank’s policy direction for 2025.
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