U.S. Fed Expected to Cut Rates by 0.25% Following March’s 2.4% Inflation

7 hours ago 3

Main Takeaways:-

The U.S. Consumer Inflation Index was at 2.4%, opposite to the expectation of 2.6%.
A smaller increase in prices was needed for the Fed to lower interest rates at the May 6-7 meeting.
The U.S. Federal Reserve is expected to choose, at minimum, a 0.25% interest rate reduction.
Bitcoin may rebound above $100k, and the Altcoin market is likely to bounce back a minimum of 30% to 50% following the interest rate reduction.

U.S. Consumer Price Index at 2.4% vs Predictions of 2.6%

The U.S. Consumer Inflation Index for the month of March 2025 occurred at 2.4%, near the 2% aim of the U.S. Federal Reserve. Markets guessed inflation would be 2.6% for March 2025. But last month, in February 2025, the actual number was 3.1%.

The lowest exact numbers are crucial for an interest rate reduction because they indicate reduced inflation pressure. Slower inflation is needed to prevent a situation where inflation goes above 10% in the USA.

Will the US Fed Lower Interest Rates? How Much Can We Expect?

The US Fed is expected to lower interest rates by at least 0.25% and, at most, by 0.5%. If this happens, the new Federal Funds rate would be about 5.12%, which is between 5% and 5.25%, down from the current rate of 5.37%, which is between 5.25% and 5.5%.

The main reason why we deeply believe in an upcoming rate reduction is because of the direction given by the U.S. Fed in its March 18-19 meeting. The Fed announced that from April 2025, it will start quantitative easing, which means the central bank will add money to the economy to help it grow.

Impact of the US Federal Reserve’s Rate Cut

The lower federal funds rate would make loans cheaper and encourage people to save less, which would help more money flow into the economy.

According to the result, the crypto and stock market could observe a significant surge between 10% to 20%. This surge will provide a significant increase to the global economy in the short term during a tough global trade conflict led by the US.

How US Fed Rates Impact Inflation

Within any economy, the responsibility for determining monetary policy is operated by the central bank of that country or by the financial system, for example, the Federal Reserve in the USA, the European Central Bank in the EU, and the Reserve Bank in India.

To boost the circulating currency, the central bank reduces interest rates, so banks can borrow money at a lower cost. To reduce the amount of money in the economy, the central bank increases interest rates. This makes people save more by purchasing bonds, and loans become more expensive. On the other hand, extra money gets removed from the market.

In the U.S. financial system, this function is performed by the U.S. Federal Reserve, which decides all interest rate decisions depending on aspects like economic activity, price index numbers, jobs data and a few other numbers. In all of them, inflation has the most significant impact. The US Federal Reserve is expected to maintain inflation between 0% to 2%.

Disclaimer: We at Bitcoinik.com present you with the latest information in the crypto market. However, this information should not be regarded as financial advice and viewers should consult their financial advisors before investing.

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