Rate Decision Overview
On December 10, 2025, the Federal Reserve’s Federal Open Market Committee reduced the federal funds rate target by 25 basis points to a range of 3.50%–3.75%. This move represents the third rate cut of 2025 and reflects the Fed’s dual mandate considerations amid slowing GDP growth and moderating inflation across consumer prices, services and housing markets. The decision included a $60 billion Treasury bill purchase to support liquidity.
Chair Powell’s Commentary
During the post-meeting press conference, Chair Jerome Powell acknowledged that upside risks to inflation persist even as labor market data shows cooling job gains. He noted that only one additional rate cut may be feasible in 2026 under current projections. Powell described policy as lacking a “risk-free path,” highlighting the challenge of balancing price stability with full employment objectives amid mixed economic signals.
Market Impact
Bitcoin (BTC) initially rallied on the announcement, climbing from $92,500 to a peak near $94,100 within minutes. However, mixed forward guidance capped gains. Data from the CME Group indicates that only 24.4% of traders expect another cut at the January 2026 FOMC meeting, down from 35% prior to this meeting, reflecting tempered market optimism.
Analyst Insights
Market analyst Nic Puckrin of Coinbureau forecast that attention will shift to the Fed’s balance sheet policy and liquidity operations in early 2026. The absence of quantitative easing until economic indicators warrant intervention may trigger higher volatility for risk assets, including digital currencies. Puckrin also warned that Treasury market dynamics could impact crypto brightness.
Political and Policy Context
Political pressure on the Fed has increased following public statements from President Donald Trump weighing potential replacements for Chair Powell. A government shutdown earlier in the quarter delayed critical economic data releases, complicating the committee’s outlook. Discussions around central bank digital currencies and stablecoin regulations may also influence policy deliberations.
Broader Implications
The rate decision underscores the integrated nature of global financial markets and crypto. Policy uncertainty may delay institutional allocations to digital assets until clearer guidance and macro stability emerge. Outlook remains contingent on economic data releases and geopolitical risks, with crypto markets positioned to react swiftly to any shifts in tone or policy direction across major central banks.
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