- FED continues interest rate cut cycle
- December FOMC meeting will be about cutting another 25 bps
- Odds for cuts approvement more than 98%, while crypto faces a decline
- Some analytics are worried about further rate cuts because gov initiatives
After FED interest rate cuts in September and November – everybody expects another rate cut by 25 basis points and an interest range of 4.25% to 4.5%.
According to the CME FedWatch, the estimation that rates will be cut is 98%, which is significantly more than 1 month ago.
Crypto markets will be affected by this one or another way as usual, but the exact way is not guaranteed.
UPD: As expected, the Fed’s benchmark rate was lowered on 25 basic points to a range of 4.25% to 4.50%.
More Details About Coming Rate Cuts
The FED continues the cycle of rate cuts started this year, in particular by 0.5 in September with a range of 4.75-5% and 0.25 in November with a range of 4.5-4.75%.
Now everyone is waiting for another 0.25 cut from a range of 4.25% to 4.5%, which will be decided by the next FOMC meeting on December 18. Expectations for a rate cut are high at over 98%, although a month ago it was 58.7%.
However, there are worries about this and even more so about further rate cuts due to a number of factors. Although inflation has been rising since it reached a 40-year peak of 9.1% in June 2022, it has not yet reached the target of 2% that the FED has indicated. Also, inflation is likely to experience an acceleration due to some factors like the new Donald Trump administration and its tax policy.
For example, Jacob Channel, senior economist at LendingTree noted in an email:
“The Fed will likely move ahead with another 25-basis point cut at its December meeting. This could be the last cut for a while though. Because the upcoming Trump Administration’s policies might cause a resurgence in inflation or otherwise throw the economy off balance, the Fed might choose to take a wait-and-see approach and hold rates steady at their January meeting.”
Crypto markets will also be affected by this decision, whatever it may be. But whatever the decision may be, its effect may be unpredictable, and as you may remember the last rate cut did not cause capital outflow from crypto.
However, we can probably already see some effect and Bitcoin has dropped by 2%, while Ethereum has dropped by 4% in the last 24 hours, and we will be able to see further drops or growth after the FOMC meeting.
Conclusion
Another key event for the world economy, in one way or another, will affect all markets from stocks to crypto. Its results will be very soon, wait for updates.
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