Key Points
- The Federal Open Market Committee (FOMC) meeting resulted in a 25-basis-point cut to the benchmark federal funds rate.
- Bitcoin reached a record-breaking all-time high of over $76,000 following the rate cut.
The November 7th meeting of the Federal Open Market Committee (FOMC) concluded with a 25-basis-point decrease in the benchmark federal funds rate.
This was a move anticipated by many in the financial sector.
Bitcoin’s Record-Breaking Surge
Following this decision, the cryptocurrency market experienced a surge, with Bitcoin hitting a record-breaking all-time high of over $76,000.
This reinforces the notion that Bitcoin’s performance is often linked to the Fed’s actions.
The FOMC meeting also resulted in the federal funds rate target range being adjusted to between 4.5% and 4.75%.
This set the stage for comments from Federal Reserve Chair Jerome Powell following Donald Trump’s presidential election victory.
Powell’s Response to Resignation Queries
When asked if he would resign if Trump requested it, Powell responded with a firm “No.”
He emphasized that the election results would not influence the Fed’s near-term policy decisions.
Powell’s comments came amidst ongoing tension with Trump, who frequently criticized the Fed chair for not loosening monetary policy at a desired pace.
Powell also addressed the question of a president’s authority to remove or demote the Fed chair, stating such actions are not legal.
Trump’s economic strategy, which includes aggressive tariffs, stricter immigration policies, and extended tax cuts, could potentially increase inflation and elevate long-term interest rates.
These potential outcomes may prompt the Fed to reconsider its approach to future rate adjustments.
Market Reaction to Rate Cut
The recent 25-basis-point rate cut marks the second consecutive reduction by the Fed.
The first rate cut in four years led to a positive reaction in the crypto market, triggering a rally across major digital assets.
This pattern was repeated following the latest rate cut, with Bitcoin’s surge being accompanied by gains in other cryptocurrencies.
Notably, Ethereum appreciated by 8%, followed by Solana with a 6.5% increase.
Cardano also saw significant gains, rallying by 11.1%.
Despite the political spotlight, the Fed remains committed to its economic goals.
In September, the inflation rate reached 2.1%, edging closer to the Fed’s 2% target.
The Fed’s latest statement highlighted ongoing solid economic growth and easing labor market conditions.
Despite a rise in the unemployment rate, it remains at a low level.
The next FOMC meeting, scheduled for 40 days from now, may consider further policy adjustments based on evolving economic conditions.
