The US Federal Reserve has finally announced its eighth and last policy decision for 2024 after a two-day Federal Open Market Committee (FOMC) meeting. It has cut interest rates by 25 bps to 4.5%-4.75%, aligning with market expectations. This marks the third consecutive rate cut since a 0.5% reduction in September.
Notably, Wall Street had expected the central bank to slash the benchmark interest rate by 25 basis points (bps) for the second straight meeting after lowering it to 4.50 – 4.75 per cent in November. Markets were confident in a rate reduction, with CME Group’s FedWatch tool indicating a 99% probability.
The last policy verdict by the central bank came just after Republican Donald Trump secured a landslide victory in the 2024 US Presidential elections. In the September meeting, the US Fed slashed the benchmark interest rate by 50 basis points to 4.75 per cent-5 per cent for the first time in four years after policymakers expressed confidence that inflation was consistently on track to come near the target level.
Fed Not In A Hurry To Slash Rates
The US Fed policymakers estimate the benchmark interest rate falling by another half-point by the end of this year, another full percentage point in 2025, and a final half-point reduction in 2026 to end in a 2.75 per cent-3.00 per cent range.
The Fed Chair Chairman Jerome Powell had earlier indicated that the committee is in no hurry to reduce the key benchmark interest rates and that the committee will be more careful in the rate cut approach.
Also, earlier, Goldman analysts referenced a speech by Beth Hammack, president of the Federal Reserve Bank of Cleveland, where she stated that resilient growth, a strong labor market, and elevated inflation justify maintaining a modestly restrictive monetary policy for some time, as it could help to “sustainably return inflation back to 2 percent in a timely fashion.”
Impact On Crypto
“While a rate cut is undoubtedly favorable for Bitcoin’s price, the market appears to have already priced in a 25 basis point cut in December,” Min Jung, research analyst at Presto Labs, noted. He added that, as a result, the actual rate cut may have a minimal direct impact on Bitcoin’s price.
Jung emphasized that attention will turn to the December FOMC meeting’s Summary of Economic Projections and comments from Powell on future rate cuts. He noted that any unexpected developments or surprises from these factors will likely be the key drivers of Bitcoin’s price action.
Just recently, Bitcoin (BTC) took a pause after hitting an all-time high of $108,268 as traders awaited the Federal Reserve’s anticipated interest rate cut and optimism from strategic Bitcoin reserve plans.
