As expected, the Fed cut interest rates by 25 basis points.
All eyes will be on Federal Reserve Chairman Jerome Powell’s press conference starting at 22:30 (UTC+3).
Here’s Bitcoin’s initial reaction after this decision:
In addition:
- The Federal Reserve will begin purchasing government bonds on December 12th.
- The Fed said it would evaluate the size and timing of any additional interest rate adjustments.
- The Federal Reserve has announced that it will purchase $40 billion worth of government bonds within the next 30 days.
Fed members are deeply divided between those who support lowering rates to protect a weakening labor market and those who believe easing could reignite inflation. Therefore, the main topic of the meeting was the expectation of “hawkish interest rate cuts,” a phrase that is often used these days. This means that even if rates are cut, the Fed will maintain a cautious and tight stance on its next actions.
“The most likely scenario is a rate cut, but statements and press conferences indicate there is no rush to cut rates further,” said Bill English, a former Fed director of monetary policy and a professor at Yale University. English said he expected a message from the Fed emphasizing that it is satisfied with current levels and that there is no need for new action in the short term.
Wall Street economists expect the statement could return to language similar to last year’s regarding the “scope and timing of further adjustments,” potentially raising the bar for future rate cuts.
David Mericle, an economist at Goldman Sachs, said Mr. Powell’s remarks highlighted the divisions within the committee, especially by emphasizing the views of those opposed to rate cuts. Similar to the October meeting, “no” votes are expected from both sides, further revealing fundamental disagreements over the dot plot.
