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Fed has implemented its first rate cut, signaling the end of the tight monetary policy era. Following this decision, interest rates have begun to decline from their peak. The initial cut of 50 basis points reflects the Fed’s recognition of weakening employment conditions and the risks associated with excessive tightening. The minutes from this meeting offer critical details regarding these developments.
Details from Fed Minutes Released
The meeting that initiated interest rate hikes has historically resulted in negative outcomes for the cryptocurrency market. Now, we will review the specifics from the meeting where the first rate cut occurred. Comments from members regarding the potential for faster rate reductions and other positive aspects may bolster risk markets.
The Fed is expected to lower rates by 100 basis points this year, and the median forecasts from members were revised accordingly in the last meeting. Significant downward revisions in rate predictions are seen as positive. Key takeaways from the minutes can be summarized as follows:
- Fed minutes have been released.
- Participants emphasized the importance of conveying that decisions depend on economic development and risk balance rather than following a predetermined path.
- A few participants noted that a 25 basis point cut could signal a more predictable normalization path.
- Many Fed officials stressed the importance of indicating that quantitative tightening may continue for some time, even if rates are lowered.
- While Fed officials predict the economy will remain strong for the September meeting, growth forecasts for the second half of 2024 have been revised downward to reflect weaker labor indicators.
The likelihood of a 50 basis point cut in November has increased.
