According to a Wall Street Journal report, the Federal Reserve is seeing a split within its ranks between those who support another interest rate cut in December and those who oppose another rate cut. The Fed has rolled out two interest rate cuts in 2025, with the most recent cut in October.
Federal Reserve Chair Jerome Powell’s speech after the October rate cut suggested that we may not see further interest rate reductions in 2025. Powell warned about challenges arising from slow economic growth and rising inflation. Let’s discuss where the crypto market stands in all this.
Will The Crypto Market Rally If The Federal Reserve Cuts Rates Again?
Many anticipated the crypto market to rebound after the October interest rate cut. However, the market did not respond to the 25 basis point rate reduction. Most assets saw prices consolidate, while many faced corrections. The market correction could have been due to Powell’s bearish speech. It may have also been due to the weak macroeconomic environment and global trade uncertainty.
Another interest rate cut from the Federal Reserve may just trigger a market-wide turnaround. Interest rate reductions are generally considered bullish for the crypto market as they allow investors to put their money in risky assets, as borrowing becomes easier. While interest rate cuts often lead to rallies, the October rate reduction seems to have been an anomaly. Moreover, October has historically been a bullish month for the crypto market.
While another rate cut could do the trick for the crypto market, it is still uncertain if the Federal Reserve will actually announce another rate cut in 2025. According to CME FedWatch, there is a 63.4% chance that the Federal Reserve will reduce rates by another 25 basis points in December, while there is a 36.6% chance that rates will remain unchanged.
