US Federal Reserve Chair Jerome Powell stated that the 19 members of the Federal Open Market Committee (FOMC) are still divided regarding potential interest rate cuts in 2025.
During Wednesday’s press conference, following the Fed’s 25-basis-point rate reduction, Powell emphasized that the central bank is working to balance its dual mandate of ensuring maximum employment and maintaining price stability in a challenging environment where the labor market is weakening despite high inflation levels. Powell remarked:
“You will have seen that we have 10 participants out of 19 who indicated two or more cuts for the rest of the year, while nine indicated fewer. In many cases, there are no further cuts.”
According to Powell, the “median” FOMC projection from the Federal Reserve’s Summary of Economic Projections (SEP)—which provides the Fed’s quarterly outlook for the US economy that guides interest rate decisions—anticipates interest rates at 3.6% by the end of 2025, 3.4% at the end of 2026, and 3.1% at the end of 2027.
“I would encourage everyone, as always, to interpret the SEP through a probabilistic lens, considering various possible outcomes and their likelihoods rather than viewing them as certainties,” Powell stated.
The rate cut announced today marks the first of 2025, lowering the US interest rate to a range of 4%-4.25%.
Crypto investors are actively speculating on the possibility of further cuts in 2025, as these are perceived as bullish factors for risk-on asset prices that thrive on credit expansion and struggle during credit contraction.
Related: Federal Reserve expected to slash rates today; here’s how it may impact crypto
Crypto markets are likely to benefit from compressing interest rates
“Approximately $7.2 trillion-$7.5 trillion is currently held in money market funds, and their yields are set to decline, providing a strong incentive for capital to flow back into equities and alternatives like crypto,” forecasted Matt Mena, a crypto research strategist at exchange-traded product (ETP) provider 21Shares.
Mena noted that Bitcoin (BTC) is likely to experience a rally in Q4, potentially pushing its price past its all-time high of around $124,000. According to Mena, 62% of traders on Polymarket, a prediction market platform, believe BTC will reach $130,000 in 2025.
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