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.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 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.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

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

Flashnote Template (6).png

Research

Trading of the President's TRUMP memecoin sent the market capitalization to over $15B, resulting in all-time highs for Solana’s Real Economic Value, DEX volumes, and stablecoin supply. This event further validates Solana as the venue for high-throughput onchain activity, with Solana DEXs and DeFi applications as primary beneficiaries, while also signaling to further experimentation, utilization, and adoption of memecoins as legitimate financial instruments for speculation, crowdfunding, or capital formation. President Trump’s continued willingness to experiment in crypto reaffirms a highly-favorable political and regulatory climate for the industry.

article-image

Senator Cynthia Lummis, who is pushing for a national strategic bitcoin reserve, will lead the new subcommittee

article-image

FX volatility is believed to be the key exhaust valve of Trump’s tariff and trade policy this year

article-image

An EF-backed group focused on institutional adoption wants to be a resource for TradFi

article-image

Back in 2021, there were really only two memecoins and both hit enormous peaks along with BTC

article-image

Polygon Labs CEO Marc Boiron thinks that yield-bearing stablecoins could be the next big narrative

article-image

A Nova Labs exec referred to the last-day lawsuit “as irresponsible as it is wrong-headed”