Federal Reserve reduced interest rates on Wednesday by a quarter percent, taking the benchmark federal fund rate down to an acceptable range between 4.00% and 4.25%. This move was widely expected by the markets and marks the first time in many years that the Federal Reserve has reduced interest rates. It reflects the growing concerns about the slowing of job growth, and the increased downside risks for the U.S. economic.
Its statementThe Federal Open Market Committee noted that “recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.”
Although the Fed stressed its dual mandate, it acknowledged that “uncertainty about the economic outlook remains elevated” This is what you should know “downside risks to employment have risen.”
Jerome Powell, the chair of the committee, was one of 11 members who supported this decision. Stephen I. Miran was the only member of the committee to disagree, arguing for a 50 basis-point rate cut.
Bitcoin’s Reaction to Fed Cut
Bitcoin (BTC), which was announced to have risen slightly over $116,000 after the announcement. data Bitcoin Magazine Pro. Investors are expressing their belief that the looser monetary policies could help risk assets like cryptocurrencies, such as Bitcoin.
Analysts cited Bitcoin’s rapid reaction as an indication of the asset’s growing importance as a macrosensitive asset. While the S&P 500 and Nasdaq posted modest gains, Bitcoin’s price spike underscored how digital assets may benefit disproportionately from expectations of easier financial conditions.
Policy Outlook
Fed officials stressed that future adjustments would depend on the data received. “In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks,” This is what the sentence reads:
FOMC also confirmed its commitment towards quantitative tightening by continuing to decrease its holdings in Treasury securities as well mortgage-backed asset.
Traders look ahead are now Bloomberg reports that the Fed is pricing in additional rate cuts, if the inflation remains low and the labor markets continues to deteriorate. Powell will likely elaborate on the Fed outlook at his press conference today.
This latest move signals that the Fed is taking a more cautious approach to easing. Bitcoin’s reaction suggests digital assets could benefit from the Fed’s initial steps towards looser policies.
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Source: bitcoinmagazine.com
