$BTC
💡After three rate cuts, has the Federal Reserve pressed the 'pause' button? Finding direction amidst market fluctuations
As the end of the year approaches, the Federal Reserve completed its last interest rate decision of the year on December 11, announcing a 25 basis point reduction in the benchmark rate to 3.50%-3.75%, marking its third consecutive rate cut. This adjustment was in line with widespread market expectations, with a total rate cut of 75 basis points for the year. However, the FOMC statement released after the decision revealed the most significant internal disagreement in nearly six years, suggesting that future policy actions may slow down and the likelihood of further actions in the near term has decreased. Subsequently, Federal Reserve Chairman Jerome Powell's remarks at the press conference were more moderate than market expectations, further fueling speculation about the future path.
Following the announcement, global market reactions showed divergence. U.S. stocks surged initially but narrowed gains, short-term U.S. Treasury yields fell, gold prices rose, and the U.S. dollar index posted its largest single-day decline in nearly three months. The cryptocurrency market also experienced significant volatility, with Bitcoin briefly approaching $94,500 before sharply retreating below $90,000. After a short-term emotional release, the market quickly shifted its focus to policy sustainability and next year's economic direction.
Although this decision completed a 'preventive rate cut', the dot plot and officials' voting distribution revealed a rare divergence in the decision-making body regarding the trade-off between inflation and employment. Three members voted against the rate cut decision, with two advocating for maintaining the current rate and the other suggesting a more significant cut. This divergence highlights significant differences within the Federal Reserve regarding the economic outlook, adding uncertainty to whether rate cuts will continue next year.
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Interest rate futures market data indicate that traders expect a high probability of pausing rate cuts at the January meeting next year, with the likelihood of maintaining rates unchanged before March also exceeding fifty percent.
