Key Points
- The Federal Open Market Committee (FOMC) cut the benchmark federal funds rate by 25 basis points, sparking an increase in the cryptocurrency market.
- Bitcoin [BTC] hit an all-time high of over $76,000 following the rate cut.
The FOMC meeting on 7th November resulted in a 25-basis-point cut to the benchmark federal funds rate, as predicted by many market watchers.
This decision led to a significant increase in the cryptocurrency market, with Bitcoin [BTC] reaching a record-breaking all-time high of over $76,000. This further reinforces the notion that Bitcoin reacts positively to the Fed’s decisions.
Fed Chair’s Stance on Resignation
The FOMC meeting reduced the target range for the federal funds rate to between 4.5% and 4.75%. It also set the stage for Federal Reserve Chair Jerome Powell’s first comments after Donald Trump’s decisive victory in the U.S. presidential election.
When questioned at the post-meeting press conference about whether he would resign if Trump asked him to, Powell firmly replied, “No.” He also stressed that the election results would not affect the Fed’s near-term policy decisions.
Trump’s Criticism and Market Reaction
Powell’s comments were made amidst ongoing tensions with Trump, who frequently criticized the Fed chair. Trump accused Powell of not easing monetary policy quickly enough after appointing him in 2017.
Powell also addressed whether a president can remove or demote the Fed chair during the conference, stating that such actions are “not permitted under the law.”
Trump’s economic strategy, which includes aggressive tariffs, stricter immigration policies, and extended tax cuts, could potentially increase inflation and raise long-term interest rates. These potential outcomes may lead the Fed to reassess its approach to future rate adjustments.
The recent 25-basis-point rate cut is the Fed’s second consecutive reduction, following a larger half-point cut in September. The cryptocurrency market responded positively to the first Fed rate cut in four years, triggering a rally across major digital assets.
This trend continued with Bitcoin’s surge, which was accompanied by gains in other cryptocurrencies. Notably, Ethereum [ETH] appreciated by 8%, followed by Solana [SOL] with a 6.5% increase. Additionally, Cardano [ADA] rallied by double digits, posting gains of 11.1%.
Despite the political spotlight, the Fed remains committed to its economic goals. In September, the inflation rate reached 2.1%, inching closer to the Fed’s 2% target.
The Fed’s latest press release highlighted continued solid economic growth and eased labor market conditions. Although the unemployment rate had risen, it still remained at a low level.
The next FOMC meeting is scheduled for 40 days from now, where further policy adjustments may be considered based on evolving economic conditions.