Summary of the FOMC minutes from last night.
Policy
- The Fed lowered interest rates by 0.25% (25 basis points), bringing the federal funds rate range from 4.25% - 4.5% down to 4% - 4.25%.
- This is the first rate cut aimed at supporting the economy as growth shows signs of slowing down.
📉 Reasons for the Fed's decision
Economic growth: the first half of the year has slowed down, no longer as strong as in 2024.
Labor market: the number of new jobs created is lower, the unemployment rate has increased slightly but remains quite low.
Inflation: still above the Fed's target of 2%, meaning prices are still “hot”.
Risks: The Fed notes that risks to employment have increased, meaning the likelihood of economic weakness or recession is higher.
🔮 Future forecasts
2025: The Fed expects to cut another 0.25% → year-end interest rate ~ 3.6% (instead of the previously forecasted 3.9%).
2026: Interest rates continue to decrease slightly to 3.4% (instead of 3.6%).
💡 Implications for investors
Short term: interest rate cuts increase expectations for cheap cash → supporting the stock market, gold, and even crypto.
Medium term: The Fed remains cautious as inflation has not dropped to 2% → meaning they will reduce rates “in small steps”, not too quickly.
Long term: the general trend is a gradual decrease in interest rates in 2025–2026, meaning a return to a low cash environment → favorable for risk assets like Bitcoin and altcoin.
Tonight, I will go into more detail about macroeconomics. Thanks everyone 🌹