The Federal Reserve announced on Wednesday (17) the reduction of interest rates in the United States by 0.25 percentage points, bringing the range to 4% to 4.25%. This was the first cut made by the central bank this year. Shortly after the news, the cryptocurrency market reacted moderately, with Bitcoin remaining around $116,000. However, after the speech of Fed Chairman Jerome Powell, the currency began to lose strength.
Around 4 PM, Bitcoin had accumulated a decline of 1.4% in the last 24 hours, being traded at $115,059.
Although the decision of the Federal Open Market Committee (FOMC) was already within expectations, Powell's remarks dampened investors' enthusiasm by indicating that the measure did not signify the beginning of a prolonged cycle of cuts.
The projections released by the Fed point to a possible additional reduction of up to 0.50 points by the end of 2025, followed by cuts of 0.25 points per year until 2027. Among the 19 members of the FOMC, nine expect two new cuts next year, two expect only one cut, and six advocate that there should be no new reductions in 2025. The newly appointed governor Stephen Miran was the only one to vote against the decision, advocating for a larger reduction of 0.50 percentage points.
According to Sarah Uska, a cryptocurrency analyst at Bitybank, the decision came under strong pressure from President Donald Trump, who had been calling for lower interest rates, in addition to recent conflicts with the Fed leadership regarding the conduct of monetary policy. For her, the next steps for the U.S. economy and the effects of this decision will be crucial for the behavior of digital assets.
Powell classified the move as a "risk management cut," explaining that the measure acts as a protection against a potential sharp economic slowdown. "There are no decisions without risks at this moment. It is unclear what the ideal path is," he said, emphasizing that he does not see political interference in the central bank's choices.
The Federal Reserve kept interest rates unchanged in the last five meetings since December, when it had implemented a cut of 0.25 percentage points. After these decisions, President Jerome Powell repeatedly highlighted the institution's concern about inflation, which remains persistently above the 2% annual target, and reinforced that the next measures would depend on the evolution of economic indicators.
However, recent labor market data — including a revision that reduced the total number of jobs created in the 12 months ending in March by 911,000 — indicated signs of weakening economic activity, raising expectations for a new interest rate reduction.
