Federal Reserve Cuts Rates by 25 Basis Points, Plans to End QT by December
The Fed lowers its benchmark rate to 3.75%-4.00%, marking the second consecutive cut as it confronts weakening job growth and persistent inflation pressures.
The Federal Reserve reduced its benchmark interest rate by 25 basis points to a target range of 3.75%-4.00%, the lowest in three years, marking its second consecutive meeting with a rate cut to address slowing hiring. Two officials dissented, with one favoring a larger reduction and another preferring no change amid ongoing inflation concerns. Chair Jerome Powell confirmed that Quantitative Tightening will end by December 2025. Bitcoin fell from $116,000 to below $111,000 following the news before stabilizing. The policy action signals an effort to boost liquidity while balancing inflation risks.
- Quantitative Tightening (QT): A monetary policy where the Federal Reserve reduces its balance sheet, usually by selling government bonds or letting them mature, to decrease liquidity and control inflation.
- Basis Point: A unit equal to one one-hundredth of a percentage point, commonly used to describe changes in interest rates and financial metrics.
- Bitcoin Price Reaction: The tendency of Bitcoin’s market value to respond to shifts in monetary policy, such as interest rate changes or liquidity measures by central banks.