Fed Lowers Interest Rates

On Wednesday, the Fed announced its decision to lower interest rates by an aggressive 50 basis points, or half a percentage point, marking the first cut since March 2020 and signifying a shift in its monetary policy approach.

Fed Chair Jerome Powell stated in a news conference that commencing the unwinding of the Fed’s historic tightening policy while the U.S. economy is still strong will help reduce the chances of a downturn.

“We’re trying to achieve a situation where we restore price stability without the kind of painful increase in unemployment that has come sometimes with this inflation. That’s what we’re trying to do, and I think you could take today’s action as a sign of our strong commitment to achieve that goal,” Powell noted.

However, Powell refrained from committing the Fed to a similar pace in the future, emphasizing that upcoming decisions would depend on the economic performance in the following months.

“I do not think that anyone should look at this and say, Oh, this is the new pace,” Powell remarked. “The economy can develop in a way that would cause us to go faster or slower.”

Crypto Market Reacts

Bitcoin surged to a three-week high, along with a rise in U.S. equities futures, as the Federal Reserve’s substantial interest-rate cut impacted markets. At the time of writing, BTC was up 4.31% in the previous 24 hours, reaching $62,336, and up 8% for the week.

Several cryptocurrencies also saw increases: Ethereum (ETH), Solana (SOL), Cardano (ADA), and Shiba Inu (SHIB) were up between 5% and 8% in the last 24 hours. Others like SUI, TAO, Dogwifhat (WIF), Celestia (TIA), SEI, and FLOKI experienced gains ranging from 10% to 24%.

Investors are now anticipating an additional 70 basis points of rate cuts at the Fed’s upcoming meetings in November and December, suggesting a more aggressive stance than that of policymakers. Yet, Powell continued to caution against committing to a similar pace in the future, reminding that future actions will be guided by economic data.

Despite this nuanced outlook, the crypto market seems to dismiss these concerns, with several cryptocurrencies adding to their gains in the last 24 hours.

This article was originally published on U.Today