The Fed, as expected, cut interest rates by 25 basis points.
Now all eyes will be on Federal Reserve Chairman Jerome Powell’s press conference, which begins at 22:30 (UTC+3).
Here’s Bitcoin’s initial reaction after the decision:
In addition:
- The Fed will begin purchasing Treasury bonds on December 12th.
- The Fed stated that it will evaluate the magnitude and timing of additional interest rate adjustments.
- The Fed announced it will purchase $40 billion worth of Treasury bonds within the next 30 days.
Among Fed members, there is a significant divide between those who support rate cuts to protect the weakening labor market and those who believe that easing could reignite inflation. Therefore, the main agenda item of the meeting was the expectation of a “hawkish rate cut,” a term frequently used recently. This implies that even if rates are cut, the Fed will maintain a cautious and tight stance for its next move.
Bill English, former Fed director of monetary policy and Yale University professor, stated, “The most likely scenario is a rate cut, but with a statement and press conference indicating that there will be no rush for further cuts.” English said he expects a message from the Fed emphasizing that it is satisfied with the current level and sees no need for a new step in the short term.
Wall Street economists predict that the statement may return to language similar to last year’s, regarding “the scope and timing of additional adjustments,” which could raise the bar for future rate cuts.
Goldman Sachs economist David Mericle stated that Powell would particularly emphasize the views of anti-rate cut members in his remarks, thus highlighting the division within the committee. As in the October meeting, a “no” vote from both sides is expected, and the underlying differences in opinion on the dot plot are expected to become more apparent.