Fed cuts rates by 25 basis points, markets slip
On Wednesday, the Federal Reserve, as expected, made its first rate cut of the year, lowering the benchmark interest rate by 25 basis points. Markets had largely priced this in, and the reaction was mixed: an initial uptick was followed by a modest decline.
The S&P 500 and Nasdaq were down 0.5% and 0.3% respectively at the time of writing, while the Dow 30 gained 0.2%.Bitcoin reacted with a daily drop of 0.9%, while Ethereum slipped 0.2%. Other top-100 cryptocurrencies also showed mixed performance, though red dominated the market.
24-hour and 7-day price movements of the top 10 cryptocurrencies. Source: CoinMarketCap
Investor caution was driven by Fed Chair Jerome Powell’s press conference, which, despite his calm tone, carried subtle criticism of Donald Trump.While Powell stressed that the Fed is “well prepared to respond to economic changes,” he described the current rate cut as a “risk management tool.”
When asked about the 2% inflation target, Powell indicated that inflation is not his main concern at present. Instead, he pointed to the labor market, where low unemployment is coupled with slower job growth due to declining immigration and low labor participation. Risks, he said, are shifting from inflation toward labor market dynamics.
Two more cuts expected and the fight for independence
On the outlook, Powell reiterated that the Fed has no fixed path and adjusts policy based on incoming macroeconomic data. Among the 19 Fed officials, 10 expect at least two more cuts this year, while nine foresee fewer.
Ahead of the meeting, there had been speculation about a 50 basis point cut, but it turned out only one official—recently appointed by Trump, Stephen Miran—supported that option.
Meanwhile, Lisa Cook participated in the decision after an appeals court rejected Trump’s attempt to remove the Fed Chair. This standoff, along with Trump’s attacks on Powell, underscores the struggle over the Fed’s independence and the growing concern that the central bank could face greater direct political influence.
As we wrote, Markets surge as Powell leaves door open for rate cuts
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