As widely anticipated, the US Federal Reserve cut its benchmark interest rate range by 25 basis points to 4.0% from 3.75%. As generally expected, the Fed moved on December 1 to end the reduction of securities held on its balance sheet, i.e. the process of so-called “quantitative tightening”.
“Jobs gains have slowed this year, and the unemployment rate rose but remained low during August,” the bank’s policy statement said. “Inflation has increased since the beginning of the year and remains somewhat elevated.”
Interestingly, there was some opposition to the rate cut, with Kansas City Fed President Jeffrey Schmid voting to keep the policy steady. As he did at the last meeting, Fed Governor Stephen Miron voted for a 50 basis point rate cut.
Bitcoin falls in session ahead of rate decision The situation remained the same in the minutes after the news, trading at $111,700, down 3% in the last 24 hours.
Stocks continued modest gains on the session, with the Nasdaq gaining 0.5%, leading the major averages. The 10-year Treasury yield rose three basis points to 4.02% and the dollar strengthened.
Market participants’ attention is now focused on Fed Chairman Jerome Powell’s press conference at 2:30 pm ET for any clues about the central bank’s thinking on the economy, inflation and interest rates. At present, traders fully expect a rate cut of 25 basis points at the Fed’s final meeting of the year in December.