The President of the Federal Reserve of the United States, Jerome Powell, has stated that the Federal Open Market Committee (FOMC) is divided over the possibility of making further interest rate cuts during the year 2025. This division reflects a lack of consensus among the 19 members of the FOMC.
Meeting-by-Meeting Assessment
During a press conference following the recent 25 basis point rate cut, Powell commented that the FOMC is evaluating interest rates at each meeting without adopting a long-term stance. “You would have seen that we have 10 out of 19 participants who penciled in two or more cuts for the rest of the year, and nine who penciled in fewer. In a number of cases, some do not expect any additional cuts,” the Chairman stated.
FOMC Projections
Powell also shared details about the Federal Reserve’s Summary of Economic Projections (SEP), which provides a quarterly outlook on the U.S. economy—a tool that informs interest rate decisions. According to the FOMC's average projections, interest rates are expected to be at 3.6% by the end of 2025, 3.4% by the end of 2026, and 3.1% by the end of 2027.
In this regard, Powell advised the public to view the SEP “through the lens of probability,” acknowledging that there are different possible outcomes and probabilities rather than absolute certainty.
Impact of the Rate Cut
The announced rate cut is the first of 2025 and adjusts the U.S. interest rate to a range of 4%-4.25%. This situation has led cryptocurrency investors to speculate about future rate cuts, as such measures are often seen as a positive catalyst for risk asset prices. These assets tend to benefit from expanding credit and suffer from its contraction.
Crypto Market Outlook
The cryptocurrency research strategist at 21Shares, Matt Mena, estimates that the cryptocurrency market could significantly benefit from the compression of interest rates. According to Mena, between $7.2 trillion and $7.5 trillion remains parked in money market funds whose yields are now starting to decrease. This, in turn, could create a strong incentive for capital to be directed toward stocks and alternatives like cryptocurrencies.
Mena also anticipates that Bitcoin (BTC), which is currently trading near €101,302, is positioned favorably for a surge during the fourth quarter, potentially pushing its price above the all-time high of approximately $124,000. According to an analysis from Polymarket, a well-known prediction market, 62% of traders believe that BTC will reach $130,000 in 2025.
Conclusions
The current division within the FOMC regarding future rate cuts reflects a complex economic context, where job growth is losing momentum while inflation remains elevated. The uncertainty surrounding future monetary policy decisions, along with the impact on the cryptocurrency market, becomes a topic of interest for both investors and economic analysts.
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