The US Federal Reserve approved the first interest rate cut for 2025 during the Federal Open Market Committee meeting yesterday. Even after interest rates were slashed, the crypto markets did not show a significant reaction.
Federal Reserve Chairman Jerome Powell, aka ‘Mr. Late, by President Donald Trump, finally granted Trump’s wishes. After deferring a rate cut for nine and a half months, Powell finally cut the interest rate by 25 basis points. The interest rates for lending were reduced between 4.00%-4.25%, after a vote was won 11-1. The standalone vote was from the newly appointed Governor, Stephen Miran, who was the only policymaker to vote against the quarter-point move, advocating for a half-point cut.
Justifying the rate cut, Powell reinforced what many analysts have already argued., Powell stated, “I thought a quarter point wouldn’t make a huge difference to the economy”. “But you’ve got to look at the whole path of rates,” he says. “Markets have already been baking in expectations.”
Crypto markets stay dormant
As rightly stated by Powell, the crypto markets did not show a huge spike or abnormal activity on the chart. The total crypto market cap hit $4.11 trillion from yesterday’s $4 trillion– a change of 1.73%.
Meanwhile, the price of Bitcoin crossed above $117K after a month, and it is currently trading at $117.75K, gaining just over 1% value during the past 24 hours. The Altcoin Season Index also rose above yesterday’s 71 and hit 73, moving further towards the altcoin season territory. Just like Bitcoin, many altcoins also painted their charts in green.
Ethereum crossed above $4,600, gaining almost 2.5% during the past 24 hours, while XPR touched $3.1, gaining 2.7% in 24 hours.
Also read: Fed rate cut expectations push gold price to record high: Is altseason next?
What does a lower Fed rate mean to Americans?
The Fed’s interest rate implies how much companies, financial institutions, and banks charge on mortgages, debt, loans, and credit cards. However, just because the Fed rates fell, it doesn’t mean all debts will get cheaper. For instance, fixed mortgages won’t change, and loans could also have a bandwidth, which could be an advantage to them. After all, they are not lending money to you out of love, but they, too, want to make money by lending, don’t they?
With the present economic condition, it might take more than a 0.25% cut to see the impact, such as cheaper deals for new loans and mortgages. And don’t forget – not everyone is borrowing. If you have been saving, the interest you earn now will be less.
