The Federal Reserve's decision to reduce the interest rate by 25 basis points sets the tone for the new policy as Bitcoin declines following the Federal Open Market Committee meeting.
The Federal Reserve indicates a new liquidity phase with the purchase of Treasury bonds.
The Federal Reserve lowered interest rates by 25 basis points at its December meeting and confirmed that it ended quantitative tightening on December 1. Officials also stated that the central bank will begin purchasing Treasury bonds on December 12 at a rate of approximately $40 billion per month. They described this step as a measure for managing reserves rather than a return to quantitative easing. Purchases will focus on short-term bonds and will remain elevated for several months.
Chairman Jerome Powell stated that policy is now generally in a neutral zone and indicated that another increase in the interest rate is no longer on the table. He added that any future move depends on incoming data, keeping the path open for either a pause or another cut. Powell also noted a slowdown in the labor market, though he did not label it weak, stating that the pace of hiring has slowed while job openings continue to decline.$BTC
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