On December 18, the United States Federal Reserve reduced the target range for the key interest rate by 25 basis points to 4.25-4.5% per annum. This marks the third consecutive cut since September.
The decision aligned with market expectations and the consensus forecast of analysts.
“Recent indicators suggest that economic activity continues to expand at a solid pace. Labor market conditions have generally improved since the beginning of the year; the unemployment rate has risen but remains low. Inflation has approached the 2% target but is still somewhat elevated,” the press release stated.
In the wake of the Fed’s decision, the leading cryptocurrency fell below the $104,000 mark, briefly dropping to $103,500.
Other top-10 cryptocurrencies by market capitalization also saw declines. Ethereum fell to $3850.
At a press conference, Fed Chair Jerome Powell spoke of the economy’s strength and the labor market’s recovery. He noted that the latter no longer poses a barrier to reducing inflation to target levels.
However, he added that the regulator will approach future rate cuts with more caution.
The next Fed meeting on this matter is scheduled for January 29, 2025. According to the CME FedWatch Tool, there is an 88.5% probability of maintaining the current key rate level at the time of writing.
“It all depends on the upcoming rate cuts. If they stall, it will be hawkish and not very good for risky assets. If markets predict further cuts, Bitcoin and altcoins will surge,” stated MN Trading founder Michaël van de Poppe.
Earlier in December, Powell described Bitcoin as a speculative asset but acknowledged its role similar to that of gold.