As a seasoned market analyst with over two decades of experience under my belt, I have witnessed numerous market fluctuations and shifts driven by central bank decisions, particularly those of the Federal Reserve. The recent FOMC meeting on November 7th, 20XX, was no exception. The 25-basis-point cut in the federal funds rate set off a chain reaction across the financial markets, with Bitcoin [BTC] reaching an all-time high of over $76,000.
At the FOMC meeting held on November 7th, as expected by financial observers, there was a reduction in the key federal funds rate by 0.25 percentage points.
Making this choice sparked a significant increase in the cryptocurrency industry, pushing Bitcoin‘s [BTC] price to an unprecedented new peak above $76,000, demonstrating yet again that Bitcoin pays close attention to what the Federal Reserve has to say—and responds positively.
Fed chair addresses resignation questions
Significantly, the FOMC meeting established the federal funds rate target range at 4.5% to 4.75%. Moreover, it provided the backdrop for Federal Reserve Chair Jerome Powell’s initial comments following Donald Trump’s clear win in the U.S. presidential election.
At the post-meeting press conference, when asked whether he would resign if Trump requested it, Powell replied decisively: “Would I comply if President Trump asks for my resignation? Absolutely, but that’s not something I’m considering or expecting at this time.
“No.”
In the short run, the chairman made it clear that the results of the election wouldn’t influence the Federal Reserve’s decision-making process.
Trump’s criticism of Powell
In contrast to a history of strained relations with Trump, who often criticized Powell as Fed chair, Powell’s comments were made amidst this context. Since appointing him in 2017, the Democrat had expressed discontent during his initial term, claiming that Powell was not easing monetary policy quickly enough to his satisfaction.
At the conference, Powell additionally discussed if a president possesses the power to dismiss or reassign the Federal Reserve chair. He explained that such actions typically fall under:
“Not permitted under the law.”
Trump’s economic approach, characterized by threats of high tariffs, tighter immigration regulations, and prolonged tax reductions, could lead to increased prices overall (inflation) and possibly raise long-term borrowing costs.
These developments could lead the Fed to reassess its approach to future rate adjustments.
Market reaction to FOMC meeting’s decision
The most recent 0.25 percentage point decrease marks the second successive reduction by the Federal Reserve, coming after a more substantial 0.50 percentage point reduction in September.
According to AMBCrypto’s report, there was a surge in the cryptocurrency market following the Federal Reserve’s first interest rate reduction in over four years, which ignited a boom among leading virtual currencies.
In this instance, a pattern mirrored the past when Bitcoin’s rise was echoed by growth in other digital currencies. Specifically, Ethereum (ETH) saw a 8% increase and Solana (SOL) followed suit with a 6.5% upward trend.
Additionally, Cardano [ADA] rallied by double digits posting gains of 11.1%.
Fed’s 2% inflation objective
Regardless of the political focus, the Federal Reserve stays dedicated to achieving its financial objectives. As reported by AMBCrypto, the inflation rate climbed to 2.1% in September, moving nearer to the Fed’s desired 2% benchmark.
Read Bitcoin’s [BTC] Price Prediction 2024–2025
In simpler terms, the Federal Reserve’s recent statement emphasized ongoing strong economic expansion and improved job market circumstances. Despite an increase in unemployment, it stayed at a relatively low figure.
The Federal Open Market Committee (FOMC) will meet approximately a month and a half from today, during which they may discuss potential changes to their current policies in response to any new economic developments.
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2024-11-08 16:40