US Federal Reserve Chair Jerome Powell stated that the 19 members of the Federal Open Market Committee (FOMC) are still split on the potential for additional interest rate cuts in 2025.
During Wednesday’s press conference following the Fed’s 25-basis-point rate cut, Powell indicated that the central bank is working to balance its dual mandate of maximum employment and price stability in an atypical climate where the labor market is weakening while inflation stays high. Powell remarked:
“You will have seen that we have 10 participants out of 19 who wrote down two or more cuts for the remainder of the year, and nine who wrote down fewer than that. In fact, in a good number of cases, no more cuts.”
According to Powell, the “median” FOMC projection from the Federal Reserve’s Summary of Economic Projections (SEP) forecasts 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 people, as always, to look at the SEP through the lens of probability, so there are various potential outcomes and likelihoods rather than a certainty,” Powell noted.
Today’s rate cut marks the first of 2025, lowering the US interest rate to a range of 4%-4.25%.
Crypto investors are speculating on the chances of further cuts in 2025, viewing them as a bullish factor for risk-on asset prices, which tend to thrive amid 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 remain invested in money market funds, and their yields will now start to decrease, incentivizing capital to shift back into equities and alternatives like crypto,” predicted Matt Mena, crypto research strategist at exchange-traded product (ETP) provider 21Shares.
Mena suggested that Bitcoin (BTC) is set for a Q4 rally that could drive its price beyond its all-time high of around $124,000. According to Mena, 62% of traders on Polymarket, a prediction market platform, expect BTC to reach $130,000 in 2025.
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