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

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

Unlocked by Template (10).png

Research

Innovations on Aptos’ technical design through Raptr, Shardines, and Zaptos approach near-optimal latency and throughput by unlocking 100% utilization of network resources, with the capacity to settle 260k transactions per second with latencies less than 800ms. The original Move language was revamped with the launch of Move 2, supporting more expressivity in smart contract logic and a scalable ability to interact with high volume datasets. The ecosystem has benefitted from strong asset inflows, now hosting over $1.3B in stablecoins, $450M in bridged BTC, and $530M in RWAs. Activity in the Aptos ecosystem has grown notably over the past year, with monthly application revenue reaching ~$835k and monthly DEX volumes growing to over $5B, both at new all time highs.

article-image

Interchain Labs will focus on sovereign L1s and institutional demand, abandoning plans for smart contracts on the Cosmos Hub

article-image

Also, only three tokens have outperformed bitcoin so far this year: XMR, HYPE and SKY

article-image

The fund group has submitted proposals in recent months for other funds that would hold litecoin, solana, XRP, HBAR, Sui and others

article-image

Momentum’s back — BTC leads, risk assets follow

article-image

Ondo Finance’s acquisition of blockchain development company Strangelove follows its buy of Oasis Pro

article-image

Cryptocurrency and stock traders alike had a lot to unpack Wednesday