Fed cuts rates by quarter point as shutdown data blackout clouds outlook

As most anticipated, the Federal Open Market Committee (FOMC) lowered the benchmark federal funds rate by 25 basis points to a range between 4% and 3.75%.

“Available indicators suggest that economic activity has been expanding at a moderate pace,” the committee said Wednesday in a statement. “Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated.”

The rate cut passed by a 10–2 vote. Governor Stephen Miran again dissented, favoring a steeper half-point reduction to counter softening conditions, while Kansas City Fed President Jeffrey Schmid opposed any cut, preferring to hold rates steady.

The Federal Reserve also said it will halt balance sheet reduction on Dec. 1.

The inclusion of the words “available indicators” is notable, as the U.S. government shut down one month ago, which has led to a pause in various economic data releases, such as weekly jobs reports. Fed Chairman Jerome Powell addressed as much during Wednesday’s press conference.

“In the Committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” he said. “A further reduction in the policy rate at the December meeting is not a forgone conclusion. Far from it.”

Lower interest rates typically make traditional investments less attractive, leading many investors to seek higher returns through alternative assets such as cryptocurrencies. Today will shed light on whether politics or data is in the driving seat, according to Nic Puckrin, investment analyst and co-founder of The Coin Bureau.

“The ongoing uncertainty, which has dominated markets all year, is perhaps the reason we are not seeing more euphoria in the cryptocurrency space,” Puckrin said in a statement. “Indeed, Bitcoin is exhibiting a potential double top pattern, a bearish signal, and daily exchange volumes have dropped off a cliff.”

While volatility may reign supreme in the short term, Puckrin says the long-term investment case for Bitcoin and other risk assets remains intact.

“We’re seeing easing monetary conditions across the globe – not just the US – so fiat currency debasement is inevitable,” he said.

Bitcoin remains steady around the $111,200 level after dropping from morning highs. “Demand is present but lacks the velocity to chase new highs without a dovish surprise from the Fed,” said Timothy Misir, head of research at BRN.

Matt Mena, crypto research Strategist at 21Shares, said markets are already reflecting a shift in risk appetite.

“Bitcoin is hovering around $112K, with open interest across derivatives at record highs,” he said in an email. “Overall, we remain moderately risk-on and see a credible path for Bitcoin to break its all-time high before year-end, with Ethereum potentially retesting the $5K psychological barrier as policy tailwinds, liquidity rotation, and positive sentiment converge.”

Updated to include additional comments.

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