The US Federal Reserve today made a major decision to cut interest rates by 50 basis points, reducing the federal funds rate range to 4.75% – 5%. The move, the first major cut in more than four years, reflects concerns about the state of the US economy, despite the continued economic expansion announced.
According to the Federal Reserve Official statementRecent indicators of economic activity point to healthy growth, but job gains have slowed and the unemployment rate has edged up slightly. While inflation has made progress toward the committee’s 2 percent goal, it remains moderately high. Cutting interest rates is part of the Fed’s strategy to balance maximum employment with price stability in the face of economic uncertainty.
The Fed said the rate cut was consistent with its commitment to achieve sustained control of inflation while supporting growth in the labor market. The Committee will continue to monitor economic developments and adjust its monetary policy to mitigate risks that might impede its objectives. In addition to cutting interest rates, the Fed will maintain its policy of reducing its holdings of Treasury securities and mortgage-backed assets.
This decision reflects the Fed’s approach to dealing with a challenging economic landscape, balancing its growth and inflation objectives while remaining vigilant about potential risks that may arise in the future. Markets will now look to how this policy shift will affect broader financial conditions and future interest rate decisions.
While these rate cuts are intended to support economic growth and stabilize inflation, they could also have positive effects on Bitcoin. Lower interest rates tend to reduce the appeal of traditional assets like bonds and savings accounts, prompting investors to look for alternative investments with potentially higher returns in a low-interest rate environment, such as Bitcoin. Historically, rate cuts have increased liquidity in financial markets, which could fuel demand for Bitcoin as part of a diversified portfolio.
Federal Reserve Chairman Jerome Powell is scheduled to speak about the decision in more detail. here 2:30 PM EST.