The Federal Reserve is about to announce a 25-basis-point rate cut, likely bringing rates down to the 4.5%-4.7% range. But since everyone’s already expecting this move, it might not make waves on its own. The real buzz will come after Fed Chair Jerome Powell speaks about how he sees President-elect Trump’s economic plans playing out. Trump’s policies—especially his tax cuts, loose fiscal approach, and proposed tariffs on countries like China and Mexico—could fuel inflation, complicating the Fed’s current plan to ease rates.
Moreover, it will all depend, on Powell’s signals that Trump’s policies could push inflation higher, the Fed might have to rethink its rate cuts, and that could rattle both traditional markets and the crypto space. Bitcoin, which recently hit $75,000, has been on a strong rally, partly due to hopes that Trump’s administration will bring friendlier crypto regulations. But any hint of inflation concerns could shake up Bitcoin’s momentum, adding a new layer of uncertainty for investors.
Fed’s Rate Cuts: A Tightrope Walk
The Fed’s recent 50-basis-point cut in September was to ease the cycle to support growth, as inflation has cooled somewhat. The current rate of 4.75%-5% is above the “neutral” level, meaning the Fed has room to ease further, with additional cuts expected through 2025. But Trump’s planned fiscal expansion could force the Fed to rethink its course. Bank of America’s research team suggests that if tariffs and fiscal spending boost inflation, the Fed might have to pause its cuts or even reverse course, keeping rates higher for longer.
Crypto Impact
Thursday’s Fed meeting might not change much in terms of rates, but traders are more focused on Powell’s comments about Trump’s economic plans. If Powell downplays inflation risks, Bitcoin could continue its upward trajectory. But if he hints that the Fed will need to keep rates elevated due to Trump’s policies, it could rattle the markets, including cryptocurrencies like Bitcoin, that thrive in low-rate cuts.
Powell’s Position
Interestingly, after misreading inflation in 2021, the Fed is now more cautious, and Powell’s response to Trump’s policies could be a game-changer. If the Fed hints at a slower rate-cutting pace or higher rates in the long run, markets will need to adjust expectations. Bitcoin’s rally may face hurdles, and broader financial markets could see turbulence as the Fed walks a fine line between supporting growth and managing inflation risks triggered by Trump’s fiscal agenda.
The Fed is scheduled to announce its decision at 2:00 PM ET on November 7, with a press conference featuring Fed Chair Jerome Powell at 2:30 PM ET.
The FOMC Meeting lasts two days i.e on 7th and 8th of november and concludes with the FOMC releasing its policy decision at 2 pm Eastern time.
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