Federal Reserve Chairman Jerome Powell stated that there is a significant divide among the 19 members of the FOMC regarding the possibility of additional rate cuts in 2025.
During a press conference following the Fed's announcement of a 25 basis point rate cut on Wednesday, Powell emphasized that the central bank is striving to balance its dual mandate of maximum employment and price stability in a unique environment, characterized by a weakening labor market and persistently high inflation. Powell said:
Powell pointed out that the "median" forecast from the FOMC in the Fed's Summary of Economic Projections (SEP)—a quarterly report used to guide interest rate decisions—indicates that rates are expected to be 3.6% by the end of 2025, dropping to 3.4% by the end of 2026, and further down to 3.1% by the end of 2027.
"I suggest that everyone continue to view the SEP through a probabilistic lens, as there are different possible outcomes and probabilities here, rather than deterministic predictions," Powell emphasized.
Today's rate cut marks the first reduction in 2025, lowering the U.S. benchmark interest rate to a range of 4%-4.25%.
Cryptocurrency investors are closely monitoring the potential for additional rate cuts in 2025, as rate cuts are generally seen as a catalyst for rising prices of risk assets, which typically benefit from credit expansion and perform poorly in a credit contraction environment.
Matt Mena, a crypto research strategist at exchange-traded product (ETP) provider 21Shares, predicts: "Approximately $7.2 trillion to $7.5 trillion remains in money market funds, and the yields of these funds will now begin to decline, creating strong momentum for funds to flow back into alternative investments like stocks and cryptocurrencies."
Mena stated that Bitcoin (BTC) is expected to experience a strong rally in the fourth quarter, likely pushing its price above $124,000, a new all-time high. He added that 62% of traders on the prediction market platform Polymarket expect Bitcoin to surpass $130,000 in 2025.
Related: Bitcoin (BTC) futures traders reduce risk ahead of the FOMC meeting, but Coinbase premium shows strong spot demand
Original article: “Federal Reserve Chairman Powell States FOMC Divided on Additional Rate Cuts in 2025”
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