Jerome Powell delivered a speech explaining the Fed’s decision to implement a rate cut today. Despite the anticipated cut, most leading cryptoassets experienced a decline following a brief price increase.
Furthermore, Powell directly addressed President Trump’s attempts to sway Fed policy, asserting that it did not influence today’s decisions. In earlier speeches, he had avoided this contentious issue.
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Powell’s FOMC Speech
The FOMC has announced its decision to lower US interest rates, a highly anticipated move with significant market ramifications. Jerome Powell, Chair of the Federal Reserve, spoke to clarify this cautious decision.
In his address, Powell highlighted various negative economic indicators in the US, such as grim Jobs Reports and inflation worries. These issues contribute to a certain level of fiscal uncertainty that led Powell to maintain his cautious stance, preserving options for future actions.
“At today’s meeting, the Committee decided to lower the target range…by a quarter percentage point… and to continue reducing the size of our balance sheet. Changes to government policies continue to evolve, and their impacts on the economy remain uncertain,” he stated.
Crypto’s Muted Response
The Fed finds itself in a delicate situation, weighing inflation against employment concerns. This cautious approach may help explain why the crypto markets did not show significant reactions to Powell’s speech:
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Bitcoin, along with other major cryptoassets, displayed similar patterns during the rate cuts and Powell’s address. Although there were short-lived price spikes right after the announcement, subsequent falls wiped out those gains.
BTC, ETH, XRP, DOGE, ADA, and others all declined more than 1% since the Fed’s announcement.
Breaking with Precedent
Nonetheless, Powell’s speech diverged from his previous remarks in one significant way: he openly addressed allegations that President Trump is undermining the Fed’s independence. While Powell sidestepped this topic at Jackson Hole, various journalists repeatedly queried him on these developments.
Trump made attempts to dismiss one Fed Governor, and the last-minute appointment of a new one yesterday was rather unprecedented. This new FOMC member cast the sole dissenting vote against today’s policy change, advocating for increased rate cuts.
Powell firmly disagreed with Miran’s stance on accelerated rate cuts and reiterated that the Fed bases its decisions purely on economic data rather than partisan pressures. However, given the intensity of this pressure, this argument may not be as strong as it seems.
In summary, Powell’s speech addressed numerous economic concerns, many still uncertain. The crypto market, operating on a different set of dynamics, may have already factored in these cuts weeks ago.
Nevertheless, the declines in valuation are somewhat concerning. Given market expectations for a rally during Powell’s speech, the overall decrease in token prices could indicate bearish sentiment.
