The Federal Reserve cut interest rates by a quarter point on Wednesday, bringing the benchmark federal funding rate down from 4.00% to the target range of 4.25%. The move is widely anticipated in the market, showing a decline in central banks over several years, reflecting growing concerns about slowing job growth and increasing downside risk for the US economy.
The Federal Open Market Committee (FOMC) said: “Recent indicators suggest that economic activity growth has eased in the first half of the year. Job acquisition has slowed and unemployment has risen, but inflation has risen.
The Fed highlighted the double duties of biggest employment and stable prices, but acknowledged that “uncertainty about the economic outlook remains rising” and that “the risk of employment shortcomings increased.”
The decision to cut the rate by 25 basis points was supported by 11 committee members, including Chairman Jerome Powell. One objection came from Stephen I. Miran, who advocated a greater cut in the 50-substance band.
Bitcoin responds to the Fed cut
Following the announcement, Bitcoin (BTC) is just above $116,000, according to data from Bitcoin Magazine Pro. The move reflects investors’ feelings that loose monetary policy can support risky assets, including cryptocurrencies such as Bitcoin.
Market analysts pointed to Bitcoin’s rapid response as a sign of its growing role as a macro-sensitive asset. The S&P 500 and Nasdaq recorded modest profits, while Bitcoin’s price spikes highlighted how digital assets disproportionately benefit from expectations of easy financial position.
Policy Outlook
The Fed emphasized that further adjustments will depend on incoming data. “The committee will carefully assess the balance of incoming data, evolving prospects and risks as it considers additional adjustments to the target scope of federal fund rates,” the statement read.
FOMC also reaffirmed its commitment to quantitative tightening and continued to reduce its holdings of Treasury securities and mortgage-backed assets.
According to Bloomberg, if inflation continues to ease and the labor market becomes even more weaker, traders are now priced for potential for additional cuts. Powell plans to expand the Fed’s outlook at his press conference later today.
This latest move has signaled the central bank’s careful pivot towards easing. In the case of Bitcoin, this response suggests that digital assets could be one of the early beneficiaries of the Fed’s first step towards loose policy.
Source: https://bitcoinmagazine.com/markets/federal-reserve-cuts-interest-rates-by-25-basis-points-bitcoin-climbs-above-116000
