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On Wednesday, the Fed announced its decision to aggressively cut interest rates by 50 basis points, or half a percentage point, its first cut since March 2020, marking a shift in its monetary policy approach.
Fed Chairman Jerome Powell said at a news conference following the decision that starting the unwinding of the Fed’s historic tightening policy with a substantial step while the U.S. economy is still strong would help limit the likelihood of a slowdown.
“We’re trying to get to a situation where we can restore price stability without causing the painful rise in unemployment that sometimes accompanies that inflation. That’s what we’re trying to do, and I think you can take today’s action as a sign of our firm commitment to that goal,” Powell said.
Powell, however, was careful not to commit the Fed to following a similar pace in the future, saying future actions would be determined by how the economy performs in the coming months.
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“I don’t think anyone should look at this as a new pace,” Powell said. “The economy can evolve in ways that would cause us to go faster or slower.”
Cryptocurrency market reacts
Bitcoin hit a three-week high, accompanied by a rise in US stock futures, as a massive interest rate cut by the Federal Reserve took its toll on markets. At the time of writing, bitcoin was up 4.31% in the previous 24 hours, at $62,336, and up 8% for the week.
Several cryptocurrencies also gained: Ethereum (ETH), Solana (SOL), Cardano (ADA), and Shiba Inu (SHIB) gained between 5% and 8% in the last 24 hours. SUI, TAO, Dogwifhat (WIF), Celestia (TIA), SEI, and FLOKI saw gains ranging from 10% to 24%.
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Investors are now pricing in another 70 basis points of interest rate cuts at the Fed’s November and December meetings, signaling a much more aggressive stance than policymakers have taken. But Fed Chairman Jerome Powell has been careful not to commit to a similar pace going forward, saying decisions will be guided by economic data.
However, the cryptocurrency market seems to be ignoring this nuanced outlook as several cryptocurrencies added to their gains over the past 24 hours.
