Key Points:
Read more: Fed Interest Rates Drop 50 Basis Points for First Time in 4 Years
The decision set a target range for overnight borrowing rates of 4.50%- 4.75%, which affects consumer debt instruments such as mortgages, credit cards, and auto loans.
The Fed interest rates cut follows September’s larger half-point reduction as the Fed shifts to a less aggressive pace. In its statement, the Federal Open Market Committee, or FOMC, said that inflation is still “somewhat elevated,” and unemployment has ticked up though remaining at levels that are still relatively low. Officials also observed a general easing in labour market conditions, signalling some softening in hiring trends.
The update from the Fed also did not carry a similar conviction in hitting a 2% inflation target, something financial markets recognized. The subtle change in wording has directly benefited the cryptocurrency market as it increases investor appetite for risk assets on the heels of an overall lower interest rate environment.
In return, Bitcoin surged to near the previous all-time high. Other cryptocurrencies like Ethereum and Solana have reached multi-month highs.
The rally has come in conjunction with Donald Trump’s recent victory in the U.S. presidential election, which saw crypto market capitalization rise as high as $2.6 trillion since November 4. All in all, changes in Fed policy and political events create very good conditions for the crypto market.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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