Haciyev Reşit 
The U.S. Federal Reserve (FED) has announced its highly anticipated interest rate decision, cutting rates by 25 basis points in line with market expectations. The federal funds rate now stands in the 4.00% – 4.25% range, marking the second consecutive rate cut by the Fed and sparking cautious optimism across markets.
However, the decision was not unanimous. Reports indicate deep divisions within the committee, with some members advocating for a more aggressive rate cut, while others preferred a “wait-and-see” approach due to ongoing economic uncertainty.
FED to End Balance Sheet Reduction Program on December 1
One of the most notable aspects of the announcement was the Fed’s decision to end its quantitative tightening program. According to the FOMC statement, the balance sheet reduction process will be fully halted as of December 1, 2025.
Until now, the Fed has been selling an average of $35 billion in mortgage-backed securities (MBS) and $5 billion in Treasury bonds per month. Under the new plan, these sales will stop, and the principal payments from maturing bonds will be reinvested into short-term Treasury bills. This move is aimed at loosening financial conditions, increasing market liquidity, and mitigating the pace of economic slowdown.
FOMC Statement: Inflation Still Elevated, Labor Market Cooling
In its official statement, the Fed noted that the economy continues to grow at a moderate pace, while hiring has slowed and unemployment remains low.
The committee acknowledged that inflation has risen somewhat this year and remains above the target level.
The statement also highlighted growing risks to both sides of the Fed’s dual mandate price stability and employment emphasizing that downside risks in the labor market are becoming more pronounced.
Powell’s Remarks: December Rate Cut “Not Guaranteed”
Following the decision, Fed Chair Jerome Powell held a press conference, providing important insights into the current economic outlook. He stated that another rate cut in December is not guaranteed, and that there are diverging views among committee members:
“There are strong differences of opinion about how to proceed in December. The data remains incomplete, and uncertainty is high due to the government shutdown. In this environment, caution may serve us best.”
Powell also noted that the government shutdown had disrupted data collection, complicating the Fed’s decision-making process. He added that PCE inflation remains around 2.8%, disinflation has begun in the services sector, and that the labor market is showing gradual signs of cooling. Powell’s remarks weakened market expectations for another rate cut in December, signaling a more cautious near-term approach from the central bank.
Market Expectations Shift After Powell’s Remarks
Before the announcement, markets had priced in a 90% probability of another rate cut in December. Following Powell’s cautious tone, that probability fell to around 70%, reflecting investor sentiment for a slower and more measured easing cycle ahead.
In short, while the Fed’s rate cut provided temporary relief, Powell’s comments suggest the central bank is prioritizing stability over speed, keeping both traditional markets and crypto investors on alert for more nuanced policy moves in the months ahead.
Powell: Future Moves Will Be Entirely Data-Driven
Federal Reserve Chair Jerome Powell emphasized that future policy steps will be entirely data-dependent, with a particular focus on labor market indicators as the main determinant for upcoming decisions. He added that the policy rate is now close to a “neutral” level, signaling that any future rate cuts will proceed at a much slower and more gradual pace.
Powell also addressed the impact of rising tariffs, noting that temporary price increases could occur for certain goods. He estimated that this effect might add between 0.2 and 0.4 percentage points to inflation, but stressed that it would be a one-time adjustment.
“Inflation remains above target,” Powell said, “but persistent pressures are weakening.”
His remarks pointed to a measured and cautious easing cycle, rather than an aggressive rate-cut strategy.
Bitcoin and Market Reactions
Immediately after the Fed’s announcement, Bitcoin experienced brief volatility, dropping from $112,000 to $108,200 within minutes. However, following Powell’s “cautious yet dovish” tone, Bitcoin quickly rebounded above $110,000, reflecting a renewed sense of stability among crypto investors.
Meanwhile, gold prices climbed slightly after the rate cut, reaching $3,970 per ounce, as investors sought safe-haven assets amid expectations of looser monetary conditions. Overall, the market’s initial reaction suggests a balance between optimism and caution with Powell’s tone supporting risk assets in the short term while reinforcing a data-driven, gradual approach to future monetary easing.
U.S. Indexes React Neutrally as Markets Await Clarity
The U.S. stock indexes responded neutrally to the Fed’s rate decision. The S&P 500 closed the day with a slight gain, while the NASDAQ rose 0.3%, led by technology stocks. Analysts noted that while the decision could be interpreted positively for the crypto market in the long term, short-term volatility may increase as the U.S. dollar strengthens following the announcement.
The Fed Remains Cautious, Markets in Wait-and-See Mode
Although the 25 basis point rate cut provided short-term relief for markets, the uncertainty emphasized in both the Fed’s statement and Powell’s remarks caught investors’ attention. The decision to end the balance sheet reduction program is viewed as positive for market liquidity, but signals regarding a potential additional rate cut in December remain mixed.
According to experts, the Fed’s next moves will be data-driven and cautious. Unless there is a significant deterioration in the economic outlook, the most likely scenario is that interest rates will remain steady reflecting a measured, stability-focused policy stance in the months ahead.
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