Ah, the Federal Reserve, that mysterious entity whose every decision sends waves of panic and exhilaration through the markets like a well-placed slap in a soap opera. On Wednesday, the Fed decided to cut interest rates by 25 basis points-marking the first time they’ve dared do so since December. Why, you ask? Well, apparently the labor market’s doing a little less jigging and a lot more sagging lately.
As if we needed more signs that the economy’s on a bumpy ride, the Federal Open Market Committee (FOMC) voted to drop the target range to a cool 4% to 4.25%. Investors, naturally, weren’t exactly shocked. It’s like waiting for a plot twist that’s been telegraphed for a season.
Our dear Fed Chair Jerome Powell-who always manages to look like the calm, collected dad at a family reunion-told the press that although the unemployment rate remains as low as a knee-high garden gnome, job gains have slowed. He even mentioned that “downside risks to employment have risen.” Is there a hidden camera here, Jerome? But hey, inflation’s on the rise too, so it’s a real party, right?
The Growing Divide at the Fed: Is This a Drama or a Political Thriller?
Now, let’s talk about the drama unfolding inside the Fed. Turns out, there’s a growing divide, like a soap opera feud between characters you just can’t stop watching. The decision was almost unanimous, with only one Fed governor, the freshly appointed Stephen Miran (Donald Trump’s guy for Powell’s successor, in case you missed that subplot), wanting a heftier 0.5% cut. But who’s counting? Surely no one.
The plot thickens, though. Nine officials are now predicting two more cuts in 2025, while six officials are, apparently, firmly sipping their tea and predicting no more cuts at all. It’s like waiting for your favorite character to betray someone and wondering when that will happen.
1. Fed cuts rates by 25 bps in first rate cut of 2025.
2. Median projection shows 50 bps in additional rate cuts for 2025.
3. Governor Miran dissents in favor of 50 bps cut today.
4. Fed says downside risks to employment have risen.
5. 6 Fed…
– The Kobeissi Letter (@KobeissiLetter) September 17, 2025
As for GDP, well, it’s slowing down, just like that character you once liked but now can’t quite remember why. GDP growth slumped to around 1.5% in the first half of 2025, compared to a more respectable 2.5% last year. And what’s causing this? Apparently, it’s the consumer spending slowdown, which-let’s be real-is always a killer plot twist in any economic drama.
“The decision to cut was all about guarding against downside risks to the job market, so the October decision will once again come down to which way the incoming labor market data break,” said Michael Pearce, deputy chief US economist at Oxford Economics.
Oh, and the CME futures markets? They’re predicting an 87.7% chance of another 0.25% rate cut at the next meeting on October 29. Will they do it? Or will they leave us hanging until the next season? Tune in next time.
“We remain committed to supporting maximum employment, bringing inflation sustainably to our 2% goal, and keeping longer-term inflation expectations well anchored,” Powell concluded. Like a good cliffhanger.
Oh, and don’t even get me started on inflation. It’s above the Fed’s target at 2.9% and has been rising for the past four consecutive months. Can you imagine? Not once has it stayed at or below 2% since February 2021. It’s like watching your favorite character just keep making the same mistake over and over.
The Crypto Market’s Reaction: A Whole Other Plot
As for the crypto market, it was more like a plot twist that everyone saw coming. The rate cut was already priced in, so there was little reaction. But don’t worry, Bitcoin still managed to jump to $118,000 during early trading in Asia on Thursday. However, it’s now hovering at a modest $117,500. Oh, the drama of cryptocurrency.
Ethereum, on the other hand, pulled a nice 3% daily gain, lifting it above $4,600. The altcoins? They were partying too, with bigger moves from Solana, Dogecoin, Cardano, Hyperliquid, and Avalanche. It’s a whole ecosystem of drama over there.
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2025-09-18 08:21