Fed Ends 0.75% Streak, Opts for Lower Rate Increase in December

The hike marks the Fed’s seventh consecutive rate increase, a strategy it hopes will curb the highest inflation the country has seen in more than four decades

article-image

Federal Reserve Chair Jerome Powell | Brookings Institute/"Jerome Powell" (CC license)

share

The Federal Reserve bumped interest rates by half of a percentage point on Wednesday, putting an end to its streak of 75 basis point rate increases which started back in June. 

The US central bank cited “robust” job growth and “modest” increases in spending and production. The move marks the Fed’s seventh consecutive rate increase, a strategy it hopes will curb the highest inflation the country has seen in more than four decades, but analysts have said it will not end in a soft landing. 

“Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” Federal Open Market Committee (FOMC) members wrote in a statement at the end of their two-day policy meeting. “The Committee anticipates that ongoing increases in the target range will be appropriate.”

Bitcoin initially rose on the news, which analysts say was mostly priced in, but the token promptly gave back those gains. Ether followed suit. The S&P 500 and Nasdaq Composite indexes lost 0.6% and 1%, respectively, immediately after the Fed released its decision. 

Tuesday’s Consumer Price Index reading settled traders’ nerves ahead of the rate decision when data pointed to slowing inflation. November’s year-over-year price increase came in at 7.1%, far higher than the Fed’s preferred 2% level, but still below the expected 7.3% figure. 

Markets were happy the Fed moved as anticipated, but related gains have historically been short-lived, Tom Essaye, co-founder of Sevens Report Research, said. 

“CPI coming in lower than expected for a second straight month, and falling decisively from the highs of earlier this year is clearly a macro positive, although it’s not enough, by itself, to spark a material and sustainable rally,” Essaye said. 

“While the CPI report makes the idea of disinflation more concrete, 7.1% is still much too high and yesterday’s report really doesn’t change the calculus on when the Fed pivots — that’ll depend on growth and when inflation falls further,” he added. 

The Fed has made clear it’s prepared to continue raising interest rates as needed in an effort to stem inflation. 

“Today, we’ve just moved, I think probably into the very, very lowest level of what might be restrictive. And certainly in my view, in the view of the committee, there’s a ways to go,” Federal Reserve Chair Jerome Powell said in September after the central bank locked in its third 75 basis point increase.

This is a developing story and will be updated.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

Research Report Templates (3).png

Research

Pear Protocol has proven its market fit through its pair-trading infrastructure, sustaining consistent trading activity despite recent headwinds. Its strategic pivot toward Hyperliquid integration represents a major growth catalyst amid industry consolidation. While short-term token unlocks present challenges, current valuations and liquidity conditions may offer compelling opportunities for investors.

article-image

Poseidon turns to the last great frontier in AI: IP-cleared, real-world data, coordinated, licensed and monetized onchain

article-image

In an environment where Treasury vehicles and institutions are the focus, how does a blockchain like Berachain fit in?

article-image

The VOC’s spicy dividend strategy has lessons for today’s token holders

article-image

Firms deploying crypto treasury strategies could help build “vibrant” ecosystems within the networks they back, Galaxy’s Steve Kurz says

article-image

Luca Netz says Igloo Inc. is on track to make $50M in revenue in 2025

article-image

Congress distinguishes DeFi from centralized finance, while setting federal standards for stablecoins