US Fed decides to cut interest rates by 0.5 percentage points, could this be a boon for cryptocurrencies?

At the Federal Open Market Committee (FOMC) meeting held on the 17th and 18th, the US Federal Reserve Board (FRB) decided to cut interest rates by 0.5 percentage points, double the usual rate.
The FOMC press release stated that it now has greater confidence that inflation is sustainably moving toward its 2% objective and that it judges the risks to employment and achieving its inflation objectives to be roughly balanced.
He explained that he had decided not to hold the FOMC meeting. However, he said that there was uncertainty about the economic outlook and that he would continue to pay close attention to employment and inflation.
The Fed is the abbreviation for the Federal Reserve Board (Fed. Citizens' Committee), which refers to the most important institution in charge of monetary policy in the United States. With this interest rate cut, the target range for the Federal Funds (FF) rate is now 4.75% to 5%.
Although the Bank of Japan raised interest rates by 0.25 percentage points in July 2023 and then froze the target range, this was the first interest rate cut in four and a half years since March 2020.
The possibility of a rate cut at this FOMC meeting was already hinted at, and one of the points of interest was the extent of the cut.
The August U.S. Consumer Price Index (CPI) released this month and other factors led to a strong expectation that interest rates would be cut by 0.25 percentage points.
After the Wall Street Journal and the Financial Times reported the possibility of a half-point cut, the market assumed a large rate cut.
According to the economic forecast, which is published four times a year, the median forecast for the FF rate at the end of 2024 is 4.4%, and at the end of 2025 it is 3.4%. Based on this forecast, it is expected to increase by another 0.
This represents a 5 percentage point rate cut. The FOMC has two remaining meetings this year, in November and December.
The FRB decides monetary policy while also looking at economic data that is regularly released.
It is important to note that some have questioned the reliability of the dot chart. In a briefing after the meeting, Fed Chairman Powell also said that monetary policy is not decided in advance and is decided at the meeting.
Another point of interest at this FOMC meeting was the economic outlook of the FOMC participants. While inflation has been calming down recently, the economy is on the brink of recession.
Concerns have been growing. According to economic forecasts, the median unemployment rate forecasts for the end of 2024 and the end of 2025 are both 4.4%. As of June, they were 4.0% and 4.2%, respectively.
The unemployment rate is expected to rise in the coming months, but there are observations that it will not be a big increase from last month's unemployment rate of 4.2%. The employment statistics data was the key statistic that caused the sharp drop in financial markets in August.
"The decision to lower interest rates today is in keeping with the strength of the labor market and the appropriate readjustment of the policy stance in the context of moderate growth and continued inflation heading toward 2 percent," Chairman Powell said at the press conference.
"This reflects the strength of our confidence that we can maintain our position," he said. Following the announcement of the 0.5 percentage point rate cut (3:00 a.m. on the 19th, Japan time), the NY Dow, Nasdaq Composite Index, and BitTorrent Index
The coin (BTC) rose briefly but then fell. The price of Bitcoin is currently trading at $60,231 (approximately JPY 8.55 million), down 0.2% from the previous day.
The interest rate cut was large and the economic outlook was not bad at the moment, so this would normally be a tailwind for risk assets such as stocks and cryptocurrencies, but as mentioned above, the cut was 0.5 points.
The report also included a cut in interest rates, which some believe was a factor in profit-taking. The rise in long-term interest rates in the United States also appears to have had an impact.
Looking ahead, it has been pointed out that it is important that interest rates are being lowered, and Bitcoin in particular is currently trading in the United States.
The birth of a new ETF and the approaching half-life are raising expectations for price increases. Future points of interest include the US economy and presidential election, the situation in the Middle East, and the Bank of Japan's monetary policy.
Some examples include: