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The Federal Reserve reduced interest rates by 25 basis points on Wednesday, bringing the target range to 3.5% to 3.75%. However, mixed statements from Federal Reserve Chair Jerome Powell are expected to dampen a Bitcoin price surge until the next rate-cutting phase begins in 2026, according to analysts.
“In the short term, inflation risks are leaning upwards while employment risks are decreasing, creating a difficult scenario. There is no risk-free approach to policy,” Powell stated during Wednesday’s Federal Reserve Open Committee (FOMC) meeting.
These remarks were not as “hawkish” as anticipated by some analysts, but it is now believed that the Federal Reserve will implement only a single rate cut in 2026 under Powell’s leadership, as noted by market analyst and Coinbureau founder Nic Puckrin. He further mentioned:
“Focus will shift to liquidity and the Fed’s balance sheet strategy in early 2026. However, although a Treasury bill purchase was announced today, quantitative easing won’t commence until signs of distress arise, typically resulting in increased volatility and possible hardship.”
Low interest rates tend to benefit risk-on assets like Bitcoin (BTC), but only 24.4% of traders foresee a rate cut at the upcoming FOMC meeting in January 2026, based on data from the CME Group.
US President Donald Trump is contemplating Powell’s successor, with National Economic Council director Kevin Hassett reportedly the leading candidate. Hassett previously served as an adviser on Coinbase’s Academic and Regulatory Advisory Council.
Related: Short the dip and buy the rip? Insights on FOMC outcomes impacting Bitcoin price movements
Mixed signals from Powell, yet Trump asserts the next Fed chair will cut rates
Powell noted that consumer spending and business investments are still “solid,” while layoffs and hiring levels remain low. Nevertheless, inflation continues to hover “somewhat elevated” beyond the Federal Reserve’s 2% inflation target, with the housing sector identified as still “weak.”
The Fed’s conclusions were drawn from available market data, although Powell admitted that they are lacking several months’ worth of public economic reports due to the US government shutdown.
Trump has already pressured the upcoming Fed chair to reduce rates. Powell’s term is scheduled to conclude in May 2026.
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