Fed Cuts Rates by 25 Basis Points, Bitcoin Hits Record High

Analysis

November 8, 2024 10:17 AM

In Brief:
The Federal Reserve reduced its benchmark rate by 25 basis points to 4.5%-4.75%, aligning with other central banks' monetary easing.
Bitcoin reached a new record high of $76,951 following Fed Chair Powell's assurance that Trump's election win won't impact near-term policy.

Fed Cuts Rates by 25 Basis Points, Bitcoin Hits Record High

The U.S. Federal Reserve has lowered its benchmark fed funds rate by 25 basis points to a range of 4.5%-4.75%, following similar moves by the Bank of England and Sweden's Riksbank. The decision comes amid easing labor market conditions and progress toward the Fed's 2% inflation target, though inflation remains somewhat elevated.

Powell Assures Trump's Win Has 'No Effect' on Policy

Fed Chair Jerome Powell, speaking for the first time since Donald Trump's decisive election victory, stated that the results have "no effect" on the Fed's near-term policymaking. This assurance calmed fears of a hawkish shift in response to potential inflationary pressures from the president-elect's proposed policies. Powell emphasized that monetary policy remains restrictive despite the rate cut, and noted that economic downside risks have diminished since September's 50 basis point cut.

Bitcoin and Markets React Positively

Following Powell's remarks, Bitcoin surged to a new record high of $76,951 before slightly retreating, marking a 1.6% increase over the past 24 hours. The CoinDesk 20 Index outperformed with a 4.5% gain, while U.S. stock indexes also saw gains, with the S&P 500 and Nasdaq rising 0.8% and 1.5%, respectively. Expectations for a Fed rate pause in December decreased to 28% from 33% before the meeting, according to the CME FedWatch Tool.

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