Fed Plans Two Rate Cuts in 2025, Global Markets React
The Federal Reserve has set its course for 2025, signaling just two rate cuts for the year.
In a recent interview, Mary Daly, president of the Federal Reserve Bank of San Francisco, expressed confidence in this approach, stating that the Fed is “very comfortable” with the decision.
Following a series of rate cuts this year, the federal funds rate now stands at 4.25%-4.5%, marking the end of aggressive reductions. Daly indicated that the Fed has now moved past the recalibration phase and is entering a more cautious period, focused on closely monitoring incoming data related to inflation and employment.
The Fed’s decision had ripple effects worldwide, particularly impacting Asian currencies. The Japanese yen fell by 0.74%, dropping to 155.94 against the dollar, its lowest level in a month. The South Korean won and Indian rupee also struggled, with the rupee dipping below 85 to the dollar for the first time.
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While the Bank of Japan maintained its benchmark rate at 0.25%, one board member, Naoki Tamura, argued for a rate hike, citing concerns about the yen’s weakness. Meanwhile, China’s central bank shifted gears, implementing a “moderately loose” policy for the first time in 14 years, a stark contrast to its usual cautious stance.
In Europe, the Fed’s actions sent ripples through stock markets, though currency movements were more subdued. The euro saw a modest 0.5% gain against the dollar, while the Swiss franc strengthened, with the dollar dropping 0.4% against it. The European Central Bank (ECB) continued its dovish approach, cutting rates for the fourth time this year in response to lower inflation forecasts. Across the Channel, the Bank of England held rates steady, but debates over future rate cuts highlighted divisions within the bank. Markets are now pricing in potential cuts of 50 basis points in 2025.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
