Bitcoin traded near $92,400 following the announcement, showing volatility in the immediate aftermath.
Crypto News
The Federal Reserve reduced its benchmark rate by 25 basis points Wednesday in a decision that exposed unusual division among policymakers over the direction of monetary policy.
The Federal Open Market Committee lowered the federal funds rate to a range of 3.50% to 3.75%, marking the third consecutive quarter-point reduction. Two regional Fed presidents voted against the cut, preferring to hold rates steady, while Fed Governor Stephen Miran pushed for a deeper 50-basis-point reduction. The 9-3 split vote stands out as unusually contentious for the central bank.
Bitcoin traded near $92,400 following the announcement, showing volatility in the immediate aftermath. U.S. stocks moved modestly higher while the 10-year Treasury yield dipped two basis points to 4.15%. The decision brings short-term borrowing costs to their lowest level since 2022.
The Fed stated that uncertainty about the economic outlook remains elevated and noted that downside risks to employment have risen in recent months. The central bank also announced plans to restart purchases of shorter-term Treasury securities to maintain reserve balances, which officials said had declined to levels requiring intervention.
Updated economic projections showed core inflation now expected at 3% for 2025 and 2.5% for 2026, each down 10 basis points from previous estimates. GDP growth projections increased to 1.7% this year and 2.3% in 2026, up from earlier forecasts of 1.6% and 1.8%, respectively. The dot plot remained largely unchanged, with policymakers still seeing just one rate cut in 2026 even as markets have priced in two.
The Kansas City Fed's Jeffrey Schmid and Chicago Fed's Austan Goolsbee voted to keep policy steady, having publicly opposed easing in recent weeks. Their dissent reflects broader concerns within the Fed about the pace of rate reductions. Several members had voiced opposition not just to Wednesday's cut but also to the October reduction.
Traders priced in a 24% chance of another rate cut in January according to CME FedWatch data prior to Fed Chair Jerome Powell's post-meeting press conference. The decision came as policymakers operate without several key economic data releases that remain delayed due to the recent government shutdown. President Trump has continued to criticize Powell while searching for his replacement when the chair's term ends next year.
The Fed's statement pledged to carefully assess incoming data before making further adjustments. Markets face uncertainty heading into year-end as the central bank balances concerns about softening labor markets against persistent inflation pressures. The decision to resume Treasury bill purchases, often referred to as "QE-lite," adds another dimension to the Fed's policy stance as it manages reserve levels while navigating conflicting economic signals.
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