The Federal Reserve announced a quarter-point (25 basis points) rate cut this morning (Dec. 11), lowering the benchmark interest rate to a target range of 3.5%–3.75%. Chair Powell stated that with inflation remaining elevated and employment weakening, policy judgment has become more challenging. Currently, interest rates have returned to a "broad neutral range," and whether further cuts occur will depend on incoming data. He emphasized that inflation caused by tariffs is temporary and that the overall economic outlook remains strong. Following the decision, U.S. stocks and bonds rallied in tandem, but the crypto market reaction was muted. The total market cap slipped 0.3% over the past 24 hours; Bitcoin dipped below $90K, while Ethereum fluctuated within the $3,200–$3,300 range.

Policy Must Balance Risks; Future Cuts Depend on Data

Powell pointed out that this 25-basis-point cut was primarily a response to the difficult balance between upward inflation pressures and a softening labor market, acknowledging that policy is never zero-risk. Since September, the Fed has cumulatively cut rates by 75 basis points, bringing the policy rate to a reasonable neutral level. Future rate adjustments will rely strictly on economic data, with no preset direction. Current economic momentum is generally solid, with continued growth in consumer spending and business investment, though the housing market remains weak. Despite the recent brief federal government shutdown impacting the economy this quarter, Powell expects the associated shock to be partially mitigated in the next quarter. According to the Fed’s latest Summary of Economic Projections (SEP), the GDP growth estimate for this year has been revised up to 1.7%, and next year’s to 2.3%, indicating an optimistic economic outlook.

Economic Growth Drivers, Inflation Control, and Policy Goals

Powell further explained that growth drivers for next year will come mainly from consumption resilience and AI-related investments, such as data center and equipment spending driving corporate capital input. Excluding the short-term statistical interference from the government shutdown, next year’s GDP growth is expected to be around 2.1%. He reiterated that the Fed’s core mission remains bringing inflation back to the 2% target while supporting maximum employment, and all monetary policy adjustments are based on this mandate. Powell acknowledged the pressure inflation places on households and the impact of a slowing labor market, emphasizing continued efforts to achieve the dual goals of controlling inflation and maintaining employment.

Crypto Market Reaction to Rate Cut Remains Muted

Although the rate cut provided a boost to traditional financial markets, the cryptocurrency market remained relatively calm. According to CoinGecko data, the total crypto market cap fell 0.3% in the past 24 hours, and the Fear & Greed Index dipped slightly from 30 to 29, suggesting investor sentiment is trending toward caution. Bitcoin and Ethereum prices continue to trade within a range, showing no clear directional breakout.

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