The Federal Reserve cut its benchmark interest rate by 25 basis points today, lowering the federal funds target range to 3.50%–3.75%. The move marked the central bank’s third rate cut of the year and its first since October.
The Federal Reserve said they made the cuts to support maximum employment and return inflation to 2%. Economic activity is expanding moderately, job gains have slowed, and inflation remains somewhat elevated, the Fed said.
Most officials voted for the cut, with three dissenting—one preferring a larger cut and two preferring no change. Policymakers said the decision reflects easing inflation pressures and a desire to support economic activity as growth moderates. The Fed had kept rates unchanged for several meetings after its October cut.
Fed officials also left their rate forecasts unchanged, signaling modest 25-basis-point cuts in 2026 and 2027, with expected 2026 unemployment at 4.4%, PCE inflation at 2.4% and GDP growth at 2.3%.
The 10-year Treasury yield has climbed this month even as expectations for a rate cut grew, signaling investor concern that easing policy now could reignite inflation and force rates higher later.
The Fed’s internal divisions add to that tension, as Jerome Powell heads up what is probably his final meeting as chair before President Trump names a successor, ending a tenure defined by consensus-building amid unusual discord.
Lower interest rates reduce borrowing costs for households and businesses. They can encourage spending, investment, and risk-taking across financial markets.
Before these cuts, some said that inflation was easing, but regardless, the market widely expected a 25 basis-point rate cut.
At the same time, rate cuts can also signal concern about the economy’s trajectory.
The Fed’s last rate cut
In October, The Federal Reserve cut its benchmark interest rate by 25 basis points to a range of 3.75%–4% at its October meeting, following its previous cut in September. At the time, the Bitcoin price slipped from around $116,000 to lows of $111,000 that week.
Since then, Bitcoin has plunged to lows of $80,000.
Bitcoin’s response to rate cuts has varied in the past, with sharp volatility during the Fed’s emergency easing in 2020 and a more muted reaction to the September 2025 cut.
At the time, Chair Jerome Powell also signaled that the central bank is nearing the end of its quantitative tightening program, with balance-sheet runoff expected to stop by December. QT has been draining liquidity by allowing bonds to mature without reinvestment, pushing yields higher and tightening financial conditions.
At the time of writing, Bitcoin is showing lots of volatility and is trading near $92,500.
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