TLDR
- The Fed cuts interest rates by 25 basis points to 4.50%-4.75%
- Bitcoin price at $76,644.57, up 1% in 24 hours
- RWA tokens lead market gains with 11% increase
- S&P 500 and Nasdaq hit record highs after rate decision
- Powell says the election results will not affect short-term rate policy
The Federal Reserve delivered its second consecutive interest rate cut on November 7, 2024Lowering the benchmark rate by 25 basis points to a target range of 4.50%-4.75%.
The decisionmade unanimously by the Federal Open Market Committee (FOMC), arrived at the steady economic expansion and evolving market conditions.
The cryptocurrency market demonstrated resilience following the announcement, with Bitcoin (BTC) maintaining its upward trajectory. The leading cryptocurrency traded at $76,644.57, recording a modest 1% increase over 24 hours. Ethereum (ETH) showed more robust momentum, rising 7.4% to reach $2,888.21.
Solana (SOL) continued its impressive run, nearing the $200 mark after a 4.6% daily gain. The total cryptocurrency market capitalization expanded by 1.3%, close to $2.7 trillion, demonstrating broad market strength over digital assets.
Real-world asset (RWA) protocols emerged as standout performers, rising 11% in the 24-hour period following the rate decision. According to Artemis, this performance exceeded the broader market’s average gain of 2.3% by nearly five times.
Traditional financial markets also reacted positively to the Fed’s decision. The S&P 500 advanced 0.9%, while the Nasdaq Composite Index jumped 1.62%, with both indexes hitting record highs. Notably, these gains began to materialize even before the official rate announcement.
Fed Chairman Jerome Powell provided context for the decision during the post-meeting press conference. He stressed that while economic activity continues to expand, the outlook has uncertainties. The labor market has shown signs of easing, although unemployment remains at historically low levels.
The Fed’s approach to inflation shows continued progress toward its 2% target, although current levels remain above desired ranges. Powell stressed that future rate decisions will depend on incoming economic data, outlook and risk assessment regarding employment and inflation.
Markets had largely anticipated this rate cut, as indicated by the minimal immediate price reaction in various asset classes. The move follows September’s larger half-percentage-point cut, suggesting a more measured approach to monetary policy adjustments.
Treasury yields experienced a notable drop following the announcement, in contrast to their upswing the previous day. However, the mortgage market has shown resistance to lower rates, with 30-year mortgages at 6.8%.
The FOMC’s updated statement reflects slight changes in its economic assessment. They now see the risks of meeting the employment and inflation targets as “roughly balanced”, changing their previous stance to have “more confidence” in the process.
The committee’s assessment of the labor market noted that “conditions have generally eased,” while asserting that the economy “continued to expand at a solid pace.” This careful formulation suggests a balanced view of current economic conditions.
Looking ahead, Fed participants expect to consider another quarter-point cut in December, followed by a potential pause in January to assess the impact of these policy changes. The September dot plot showed expectations for additional cuts totaling a full percentage point in 2025.
Powell addressed the recent presidential election, and explicitly stated that the results of the election will not affect short-term tariff policy decisions. He maintained the Fed’s commitment to data-driven decision-making regardless of political developments.
The Fed’s preferred inflation indicator recently showed a 2.1% 12-month rate, while core inflation, excluding food and energy, stood at 2.7%. These metrics continue to influence the central bank’s policy decisions as it aims to meet its target without triggering economic contraction.
GDP growth remained strong at 2.8% in the third quarter, but slightly below the level of the second quarter. Initial forecasts for the fourth quarter suggest further expansion at around 2.4%, according to the Atlanta Fed estimates.
