The U.S. Federal Reserve has reduced interest rates by 0.25%, setting them in the range of 3.75% to 4.00%, in line with market expectations.
Along with the rate cut, the Fed announced that starting December 1, it will stop reducing its balance sheet and begin reinvesting funds from maturing bonds.
This step increases liquidity, meaning more money will circulate in the financial system.
📝 Why This Matters
Reinvesting simply means the Fed will take the money it receives from matured bonds and use it to buy new ones.
This supports the flow of funds in the economy instead of withdrawing them.
🗣️ Powell’s Message
Federal Reserve Chair Jerome Powell signaled uncertainty about future cuts, saying that a December rate decision is not guaranteed.
He emphasized that the economy still faces risks and it is too early to commit to further easing.
Financial journalist Nick Timiraos noted that Powell wants flexibility and does not want markets to assume a rapid move toward lower rates.
📉 Market Reaction
Despite the expected cut, markets pulled back.
The main reasons:
Profit-taking after recent gains.
Powell’s cautious tone.
Global concerns including inflation and global demand.
This decline appears to be a short-term correction, not a shift in long-term direction.
💡 Impact on Crypto
Lower rates generally support risk assets like Bitcoin and Ethereum, as borrowing becomes cheaper and liquidity increases.
However, uncertainty about future cuts may cause short-term volatility.
In the long run, increased liquidity can support:
Crypto adoption.
Demand for stablecoins.
Growth of tokenized assets tied to real-world markets.
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