Bitcoin Surges 2% to $85,363 on Fed Rate Cut Forecast

Bitcoin (BTC) surged past the $85,000 mark following the Federal Open Market Committee's (FOMC) median forecast of 50 basis-point cuts in interest rates by 2025. This announcement came alongside plans to slow the pace of quantitative tightening (QT), beginning April 1. The monthly cap on Treasuries maturing without replacement will be reduced to $5 billion, down from the previous $25 billion limit. This news sparked a global market surge, with Bitcoin jumping from $84,235.71 to nearly $86,000 before settling at $85,363.

Federal Reserve Chair Jerome Powell clarified that this decision is a technical adjustment to ensure smooth market functioning, not a broader policy shift. The updated projections from the FOMC reveal a more cautious stance regarding the pace and extent of rate cuts. The median forecast brings the interest rate to approximately 3.9% by year-end. Nine policymakers anticipate two cuts in 2025, down from 10 in December, while eight now expect only one or no cuts, an increase from four in the previous forecast. Meanwhile, two members foresee three cuts, a drop from five in December, and none project more than three rate reductions.

Longer-term expectations remain largely unchanged, with the median forecast for the federal funds rate at the end of 2026 at 3.4% and 3.1% for 2027. The Fed’s longer-run estimate of the neutral interest rate remains steady at 3%. The central bank also adjusted inflation projections upward, expecting the Personal Consumption Expenditures (PCE) inflation rate to reach 2.7% in 2025, up from the previous 2.5% estimate. Core PCE inflation, which excludes food and energy, is projected to rise to 2.8%, compared to the earlier forecast of 2.5%.

During his post-meeting press conference, Powell addressed concerns over inflationary pressures, particularly the impact of tariffs. He noted that a significant portion of recent inflation upticks could be attributed to tariff-related factors but stated that their long-term impact remains uncertain. Powell also described tariff-driven inflation as “transitory” but acknowledged the difficulty of assessing its effects. He reiterated that the Fed monitors economic data for any signs of weakness but emphasized that policymakers are not hurrying to cut rates.

With persistent inflationary pressures and slowing economic growth, the Fed’s latest projections indicate a more measured approach to monetary policy adjustments. The central bank’s willingness to slow quantitative tightening while maintaining a cautious stance on rate cuts reflects a balancing act between sustaining economic stability and controlling inflation. Despite Bitcoin’s nearly 2% price increase, not all major altcoins reacted as strongly. Ethereum (ETH) is priced at $2,039.11 after a 0.6% positive variation in the same period, and Cardano (ADA) secured a slight 0.5% growth. Meanwhile, XRP and BNB showed virtually no price variation. However, Solana (SOL) crossed the $130 threshold and was trading at $133.55 as of press time.