CRYPTO MOVERS FEDERAL RESERVE RATE DECISIONS

US Federal Reserve cuts interest rates by 25 basis points

theblock.co 07/11/2024 - 19:26 PM

Bitcoin Price Reaction to Fed Rate Cut

Bitcoin's price increased after the U.S. Federal Reserve cut interest rates by 25 basis points on Wednesday.

The Federal Open Market Committee (FOMC) acted as many economists anticipated, lowering the benchmark federal funds rate to a range of 4.50% to 4.75%. This decision follows a previous cut of 50 basis points in September.

>The Committee stated, "In support of its goals, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 4.50% to 4.75%. Recent indicators suggest that economic activity has continued to expand at a solid pace. Inflation has made progress toward the Committee's 2% objective but remains somewhat elevated."

The central bank noted it would monitor economic information regarding future rate decisions, considering factors such as labor market conditions, inflation pressures, and international developments.

Fed Chair Jerome Powell is set to hold a press conference at 2:30 p.m. ET.

Trump's Potential Influence on Fed Policy

The rate cut coincided with Bitcoin achieving an all-time high of over $76,000, partly driven by former President Donald Trump’s election victory.

However, Nigel Green, CEO of deVere Group, raised concerns that a Trump administration could exert more influence over Federal Reserve policies. Green stated, "Trump frequently criticized the Fed, particularly under Jerome Powell’s chairmanship, for not lowering interest rates more aggressively."

During his previous term, Trump suggested negative interest rates, an unusual idea in U.S. monetary policy. Green speculated that with inflation cooling but still high, Trump might call for lower rates to boost economic growth ahead of the 2026 midterms.

Stock Market Reaction

The Fed's decision led to a rise in major stock indices. As of mid-day trade on Thursday, the S&P 500 gained 0.59% and the Nasdaq Composite rose 1.33%, though the Dow dipped slightly by 0.015%. The CBOE Volatility Index (VIX) dropped 6% to 15.28 points, while gold prices rose 0.98% to $2,693.43 per ounce.

Bitcoin was trading around $76,317 at the time of publication, according to The Block's bitcoin price data.




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