First Fed interest rate cut in 4 years sized at 50 bps

The decision comes “in light of the progress on inflation and the balance of risks,” according to an FOMC statement

share

The Federal Reserve reduced interest rates by 50 basis points Wednesday — a divergence from some industry watchers who expected a more conservative initial cut.  

Fed Chair Jerome Powell had made it clear the central bank intended to reduce rates, noting last month: “The time has come for policy to adjust.”

In a statement this afternoon, the Federal Open Market Committee (FOMC) said the decision came “in light of the progress on inflation and the balance of risks.”

“The committee has gained greater confidence that inflation is moving sustainably toward [2%], and judges that the risks to achieving its employment and inflation goals are roughly in balance,” the committee noted. “The economic outlook is uncertain, and the committee is attentive to the risks to both sides of its dual mandate.”

Ahead of the expected rate reduction from its previous 5.25%-5.50% range, the question remained whether the cut would amount to 25bps or 50bps.

CME Group’s FedWatch tool indicated a 55% probability of a 50bps cut a couple hours before the FOMC’s statement. 

Some industry watchers and executives had said that while investors could view a 25bps cut as a normal measure, a 50bps cut could spur fears of a recession and bring on volatility. 

“The Fed has only cut 50bps in a non-emergency situation once in the past 40 years,” Astoria Portfolio Advisors founder John Davi wrote in a blog post earlier this week. “In our view, the Fed would be making a mistake as it would imply the economy is much weaker than currently suggested.”

Still, the Fed opted for the cut of 50bps.

Jake Ostrovskis, OTC Trader at Wintermute, said in a statement earlier today that “some degree of market re-pricing is inevitable, regardless of the decision” given the differing cut expectations.

Bitcoin’s price — at about $60,000 just before 2 pm ET — initially saw a bump above $60,700 in the minutes following the rate cut announcement. 

Many expect the Fed to cut at the FOMC’s upcoming meetings slated for Nov. 7 and Dec. 18. A number of analysts had said the market was pricing in a total of 100bps — including Wednesday’s cut — in rate reductions by the end of the year.

FOMC members’ median projection in June was 25bps of interest rate cuts by the end of 2024. Latest projections released Wednesday show committee members have a median expectation of rates falling in the 4.25%-4.5% range (down from the current 4.75%-5.0%) by the end of the year. One policy maker anticipates 75bps of additional rate cuts by the year’s end.

Powell was set to give remarks during a press conference at 2:30 pm ET. 

“Beyond the initial headline cut … the market will focus on forward guidance and the rate path through 2024-2025,” Ostrovskis said. “Questions surrounding the strength of the labor market and reaction function will likely be asked during the Q&A session.”

Casey Wagner contributed reporting.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

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

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

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

Unlocked by Template.png

Research

The march toward an interoperable and onchain-by-default internet depends on reliable messaging and value transfer across heterogeneous domains. Crosschain protocols now process >$1.3T in combined annual transfer volume and secure tens of millions of user interactions, yet no single design dominates.

article-image

The goal, per Santiago Santos, is to make crypto a relatable piece of tech for people who may not even understand it

article-image

Stripe stablecoin unit aims to operate under a federal charter enabling regulated stablecoin issuance and custody services

by Blockworks /
article-image

Will TradFi make crypto better or create more problems than it solves?

article-image

Subtle decisions by risk curators saved Aave from significant turmoil

article-image

The new Rootstock Institutional unit aims to connect professional investors to Bitcoin-native yield and liquidity strategies anchored in BTC’s security layer

by Blockworks /
article-image

DOJ files record civil forfeiture against more than 127,000 BTC linked to scam activity

by Blockworks /