Federal Reserve Initiates Rate Cuts Amid Divergent Views on 2025 Policy Path

The Federal Reserve delivered its first interest rate cut of 2025, lowering the benchmark by 25 basis points to a 4.00%-4.25% range. The MOVE comes as policymakers remain split on the trajectory for further easing, with 10 of 19 FOMC members projecting at least two additional cuts this year. New Governor Stephen Miran stood alone in dissent, advocating for a more aggressive 50 basis point reduction.

Labor market deterioration appears to be driving the policy shift, with unemployment climbing to 4.3% and job growth showing marked deceleration. The decision could catalyze significant capital rotation, as $7.2-7.5 trillion parked in money market funds may seek higher yields in risk assets. Cryptocurrencies stand to benefit disproportionately from this liquidity migration.

Chair Powell characterized the move as 'carefully considered,' defending the timing despite mounting pressure for earlier action. Market participants now scrutinize whether this marks the beginning of a sustained easing cycle or merely an insurance cut against economic softening.