US Federal Reserve Chair Jerome Powell said the 19 members of the Federal Open Market Committee (FOMC) remain divided on additional interest rate cuts in 2025.
At Wednesday’s press conference after the Fed’s 25-basis-point rate cut, Powell said the central bank is trying to balance its dual mandate of maximum employment and price stability in an unusual environment where the labor market is weakening even as inflation remains elevated. Powell said:
“You will have seen that we have 10 participants out of 19 who wrote down two or more cuts for the remainder of the year, and nine who wrote down fewer than that. In fact, in a good number of cases, no more cuts.”
Powell said that the “median” FOMC projection from the Federal Reserve’s Summary of Economic Projections (SEP), the Fed’s quarterly outlook for the US economy that informs interest rate decisions, projected interest rates at 3.6% at the end of 2025, 3.4% by the end of 2026, and 3.1% at the end of 2027.
“I would encourage people, as always, to look at the SEP through the lens of probability, and, so, there are different possible outcomes and likelihoods rather than a certainty,” Powell said.
Today’s rate cut is the first of 2025 and brings the US interest rate down to a range of 4%-4.25%.
Crypto investors continue to speculate on the likelihood of additional cuts in 2025, as they are seen as a bullish catalyst for risk-on asset prices, which benefit from credit expansion and suffer from credit contraction.
Related: Federal Reserve expected to slash rates today, here's how it may impact crypto
Crypto markets are likely to benefit from compressing interest rates
“Roughly $7.2 trillion-$7.5 trillion remain parked in money market funds whose yields will now begin to fall, creating a powerful incentive for capital to move back into equities and alternatives like crypto,” Matt Mena, crypto research strategist at exchange-traded product (ETP) provider 21Shares, predicted.
Mena said that Bitcoin (BTC) is poised for a Q4 rally that will likely catapult its price past its all-time high of about $124,000. 62% of traders on Polymarket, a prediction market platform, project BTC will hit $130,000 in 2025, Mena said.
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