The Federal Reserve reduced interest rates by 25 basis points on Wednesday to a target range of 3.5% to 3.75%. However, mixed remarks from Federal Reserve Chair Jerome Powell are likely to dampen a Bitcoin price rally until the rate-cutting cycle restarts in 2026, analysts predict.
“In the short term, inflation risks lean towards the upside while employment risks lean towards the downside, creating a challenging situation. There is no risk-free path for policy,” Powell stated during Wednesday’s Federal Reserve Open Committee (FOMC) meeting.
His comments were less “hawkish” than anticipated by some analysts, but Powell’s leadership is now expected to result in just a single rate cut in 2026, according to market analyst and Coinbureau founder Nic Puckrin. He added:
“Focus will shift to liquidity and the Fed’s balance sheet policy in early 2026. However, even with today’s Treasury bill purchase announcement, quantitative easing won’t happen until issues arise, which invariably leads to increased volatility and potential challenges.”
Low interest rates boost risk-on assets like Bitcoin (BTC). Nonetheless, only 24.4% of traders foresee a rate cut at the next FOMC meeting in January 2026, according to CME Group data.
US President Donald Trump is considering candidates to replace Powell, with National Economic Council director Kevin Hassett reported as a leading contender for the role. Hassett has also served as a former advisor on Coinbase’s Academic and Regulatory Advisory Council.
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Powell delivers mixed signals, while Trump hints at aggressive rate cuts
Powell asserted that consumer spending and business investment are still “solid” and noted that layoffs and hiring remain minimal. However, inflation continues to be “somewhat elevated” above the Federal Reserve’s 2% inflation goal, with the housing sector still deemed “weak.”
The Fed drew these conclusions from existing market data, but Powell acknowledged the absence of months of public economic reports due to the US government shutdown.
Trump has already pressured the incoming Fed chair to implement rate cuts. Powell’s term is due to end in May 2026.
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