The Fed Cuts Rates Again Amid Dissent

The Federal Reserve announced a 25 basis point reduction in its benchmark interest rate on December 10th, lowering it to a range of 3.5%-3.75%.

This marks the third consecutive cut amid internal disagreements, affecting global financial conditions and signalling potential implications for cryptocurrency markets.

Fed Rate Cut Faces Internal Opposition and Crypto Market Volatility

The Federal Reserve’s decision to cut the benchmark interest rate by 25 basis points marks the third in a row. Internal divisions arose, with Fed Governor Milan and Schmid voting against the reduction. Economic indicators suggest moderate growth, with a noticeable slowdown in job creation.

The rate reduction aims to accommodate economic activity amid slowing job growth and rising unemployment before September. Market responses were divided, leading to increased volatility in cryptocurrencies. The Treasury bond purchasing announcement added complexity to market expectations.

Jerome Powell, Chair, Federal Reserve, “The decision to reduce the federal funds rate by 25 basis points reflects ongoing concerns regarding downside risks to employment and persistent inflation pressures.” Source: Federal Reserve Press Release

Crypto Prices Under Pressure Amid Fed’s Strategic Moves

Did you know? The December Fed rate decision is reminiscent of September 2019, the last time three members dissented during a rate cut vote, illustrating ongoing internal disagreements within the Federal Reserve.

Bitcoin’s price stands at $92,568.57, reflecting a 24-hour decline of 0.26% and a 7-day decrease of 1.57%. It maintains a market cap of $1.85 trillion and dominates 58.51% of the market. Trading volume reached $65.78 billion, down 2.31%, as per CoinMarketCap data.

Experts from Coincu research suggest that the Fed’s ongoing rate cuts could lead to increased interest in high-risk assets, such as cryptocurrencies, especially if traditional markets remain volatile. This move may further pressure the USD, potentially boosting crypto appeal.