As widely expected by market participants, the U.S. Federal Reserve lowered its benchmark fed funds rate by 25 basis points to 4.5%-4.75% on Thursday, following the footsteps of other central banks to loosen monetary policy.
“Since earlier in the year, labor market conditions have generally eased, and the unemployment rate has moved up but remains low,” the press release said. “Inflation has made progress toward the Committee’s 2% objective but remains somewhat elevated.”
Fed Chair Jerome Powell, who spoke for the first time since Donald Trump’s decisive win of the U.S. elections, said that the election results have “no effect” on the Fed’s policymaking in the near-term, quelling fears of a hawkish surprise.
Some observers mulled the possibility that the new president-elect’s proposed policies such as tax cuts, tariffs and deregulation to stimulate economic growth could reignite inflationary pressures, prompting the Fed to take a more cautionary approach.
Powell said that monetary policy is still restrictive even with today’s easing, but downside risks to economic growth has diminished since the Fed’s September 50 bps cut. To reporter questions, he also said he would not resign if Trump asked him to leave and firing or demoting him is “not permitted under the law.”
Following Powell’s remarks, the price of bitcoin (BTC) hit $76,951, a fresh record high before slightly retreating, still up 1.6% over the past 24 hours. The broad-market CoinDesk 20 Index outperformed gaining 4.5% during the same period. U.S. stock indexes also hit session highs, with the S&P 500 and tech-heavy Nasdaq up 0.8% and 1.5% through the day, respectively.
Expectations for the Fed to pause rates at their upcoming December meeting decreased to 28% from 33% before the meeting, the CME FedWatch Tool showed.
UPDATE (Nov. 7, 21:16 UTC): Adds remarks from Fed Chair Powell’s press conference. Updates prices.