Cryptocurrency investors eagerly awaited the Federal Reserve’s October interest rate decision, as the implications within the statement were critically important. Given the contraction in employment, the Fed had previously implemented a 25 basis point cut. With inflation exhibiting limited increases and employment remaining weak, the Fed was expected to make two more cuts this year. So, what does the recently released minutes reveal?
Fed's Interest Rate Decision
As anticipated, the Fed reduced interest rates by 25 basis points, moving in line with market expectations. The United States Central Bank typically avoids surprising the markets, and the decisions announced usually align with forecasts. This consistency ensures market stability and helps set predictable monetary policy trends for investors and analysts alike.
Prior to the interest rate decision, Bitcoin had fallen below $111,000, an expected FOMC-induced dip. Now, with Powell’s statements, Bitcoin must determine its short-term direction. Additionally, earnings reports from Meta, Microsoft, and Alphabet, expected after the U.S. market closes, could provide a bullish stimulus.
Details from the Statement
Within the Fed’s interest rate decision statement, several key details emerged. Interest rates were indeed reduced by 25 basis points. Furthermore, the reduction of the balance sheet is scheduled to halt by December 1st. Inflation has been on the rise since the beginning of the year and is lingering at slightly elevated levels.
The voting on the policy showed a strong majority, with a tally of 10-2 in favor. Fed Chairman Miran indicated a preference for a half-point cut, differing from Kansas City Fed President Schmid, who preferred no change. Uncertainty regarding the economic outlook remains at high levels, adding further weight to cautious and well-considered policy decisions.
Moreover, commencing December 1st, all principal payments from mortgage-backed securities will be reinvested into Treasury securities. This move aims to provide more liquidity in the markets and ensure a steady flow of capital within the economy.