Fed’s Dovish Pivot Sparks Risk Asset Rally Amid Persistent Inflation

BTCC / BTCC Square / Global Cryptocurrency /

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2025-09-23 14:42:02

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The Federal Reserve delivered a 25bps rate cut despite four consecutive years of above-target inflation, lowering the target range to 4.0-4.25%. Chair Powell framed the MOVE as a 'step toward neutrality' rather than a full policy pivot, but markets interpreted it as capitulation. Risk assets surged as the Fed's own projections show PCE inflation remaining above 2% through 2028 while rates decline.

Just weeks after vowing at Jackson Hole to prevent entrenched inflation, Powell's reversal reveals the central bank's tightening resolve has cracked. Credit markets now price in absurdities - with liquidity conditions masking underlying risks. The MOVE index suggests traders see this as a temporary adjustment, not a regime shift.

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