FOMC Meeting December 2024: Jerome Powell crypto statement clarifies the Federal Reserve’s stance on Bitcoin, interest rate cuts, and inflation management.
The December 2024 Federal Open Market Committee (FOMC) meeting was important for both the U.S. economy and the future of cryptocurrency. Federal Reserve Chair Jerome Powell made important comments about Bitcoin and digital assets, explaining the Fed’s position on the growing crypto market.
These statements came after the Fed decided to cut interest rates by 25 basis points (bps), lowering the federal funds rate to a target range of 4.25% to 4.50%. Powell’s comments on Bitcoin and inflation helped explain how the Fed handles these issues, affecting markets around the world. Here’s a summary of what he said about crypto and how it fits into the bigger economic picture.
Jerome Powell Crypto Statement in the FOMC Meeting
After the FOMC meeting, Jerome Powell was asked about the Federal Reserve’s view on owning Bitcoin and its role in the U.S. economy. Powell explained that the Federal Reserve Act does not allow the Fed to hold risky assets like Bitcoin.
He said, “We are not allowed to own Bitcoin. That’s something Congress should decide.” His answer shows that the Fed is careful about cryptocurrencies and that any big change in Bitcoin ownership would need Congress to make a decision.
Powell’s comments are important for understanding how the Fed feels about digital assets. The Fed prefers central bank digital currencies (CBDCs) because they are safer and more stable than cryptocurrencies like Bitcoin. Powell explained that Bitcoin is a risky asset and competes more with gold than with traditional currencies like the U.S. dollar. He believes Bitcoin is too unstable and doesn’t work well as a store of value, a point he has mentioned before.
Fed’s Decision to Cut Interest Rates
Alongside Jerome Powell crypto statement, He announced the Fed’s decision to lower its benchmark interest rate by 25 basis points. This lowers the federal funds rate to a range of 4.25% to 4.50%. It is the third time in a row that the Fed has cut rates in recent months. The cuts in September and November 2024 were also made to help the economy grow because inflation is rising.
The interest rate cut shows that the Fed is trying to help the economy. Powell said inflation is getting closer to the Fed’s goal of 2%, but it is still a bit high. Inflation has stayed between 2.5% and 3% in 2024, so the Fed changed its policies.
Powell said the US economy is still strong. The unemployment rate is expected to stay low at 4.2% in 2024 and 4.3% in the next few years. The job market has slowed down a little, but things are still good. Powell’s comments show that the Fed is trying to help the economy grow while keeping inflation under control.
The Impact of Jerome Powell Crypto Statement on Markets
Powell’s comments on Bitcoin and digital assets sent ripples through the cryptocurrency markets. Bitcoin, which had surged to an all-time high of over $106,000 ahead of the FOMC meeting, saw a sharp decline of 5.17% following Powell’s dismissal of the idea of the Fed holding Bitcoin. Bitcoin briefly traded below $101,000, illustrating the market’s sensitivity to Powell’s remarks.
In addition to Powell’s comments, President-elect Donald Trump’s proposal to create a U.S. Bitcoin Strategic Reserve has fueled speculation around the future of crypto policy in the U.S. Trump’s stance on cryptocurrency is more proactive, with plans to appoint crypto advocates to key positions within his administration. This has created a sense of optimism in the crypto market, though Powell’s remarks reflect a clear divergence in policy between the Fed and the incoming administration.
The stock market reaction was mixed, with the Dow Jones down by 0.25% and the Nasdaq falling by 0.56% after the rate cut announcement. However, the US Dollar Index went up a little by 0.05%, showing that investors still have confidence in the dollar, even with concerns about inflation and interest rate changes.
Projections for 2025: Interest Rate and Inflation Outlook
The Fed’s forecast for 2025 shows a steady view of both inflation and unemployment. The Fed has increased its inflation forecast for 2025 to 2.5%, up from 2.1% in September. This means that inflation may last longer than expected, and the Fed might keep changing its policies to deal with this. The Fed also slightly lowered its unemployment forecast, meaning the job market is expected to stay strong in the coming years…
Powell also hinted at potential quarter-point interest rate cuts in 2025 if inflation remains within the target range, further signaling the Fed’s willingness to adjust its stance depending on economic conditions.
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Conclusion:
Jerome Powell crypto statement in the December 2024 FOMC meeting has provided important insight into the Federal Reserve’s approach to Bitcoin and digital currencies. The Fed is not thinking about adding Bitcoin to its balance sheet right now. Powell’s careful comments about digital assets suggest that the Fed will keep using traditional tools to control inflation and boost growth.
As the US government gets ready for a change in leadership with Donald Trump, who supports cryptocurrencies, the future of Bitcoin and other digital currencies is unclear. The difference between Trump’s support for crypto and Powell’s careful approach will likely affect U.S. crypto policies in the future.
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