The U.S. Federal Reserve has cut its benchmark interest rate range by 25 basis points, lowering it to between 3.75% and 4.0%. This decision aligns with widespread expectations and marks a step toward concluding the ongoing “quantitative tightening” process, with plans to wrap up the reduction of securities held on its balance sheet by December 1.
In its policy statement, the Fed acknowledged a slowdown in job gains throughout the year, alongside a slight uptick in the unemployment rate, which remains low as of August. The statement also noted that inflation has increased since earlier in the year and continues to be somewhat elevated.
Not all members of the Federal Open Market Committee supported this move; notable opposition surfaced from Kansas City Fed President Jeffrey Schmid, who voted to keep policy steady. Fed Governor Stephen Miran, meanwhile, advocated for a more aggressive cut, pushing for a 50 basis point reduction.
In market reactions, Bitcoin saw a drop to $111,700, down 3% from the previous 24 hours, before the rate decision was announced. Meanwhile, stocks saw modest gains, with the Nasdaq outperforming the other major indexes, increasing by 0.5%. The 10-year Treasury yield rose by three basis points, reaching 4.02%, while the U.S. dollar gained strength.
Attention now turns to Fed Chair Jerome Powell’s upcoming press conference at 2:30 p.m. ET, where market participants will be keen to glean insights into the Fed’s perspective on the current economic landscape, inflation trends, and future interest rate movements. Expectations are already building for another 25 basis point cut during the Fed’s final meeting of the year in December.
