Fed Cuts Rates by 25 Basis Points, Bitcoin Price at Record as Powell Says Trump Win Has 'No Effect' on Policy

Fed Chair Jerome Powell's speech later today could shake up markets as he will face questions about the central bank's outlook on monetary policy

The U.S. Federal Reserve raised its benchmark fed funds rate by 25 basis points to a target range of 4.5%-4.75% on Wednesday, as widely expected by market participants.

The central bank also signaled that further rate hikes will be needed to rein in inflation, which remained stubbornly high despite recent easing.

"Inflation has declined somewhat since early this year, but remains elevated," the Fed said in a statement following a two-day policy meeting. "The labor market continues to be strong, with low unemployment and solid job gains in recent months."

"The Committee anticipates that ongoing increases in the target range will be appropriate to achieve its objectives," the statement added.

The Fed raised rates by 50 basis points in March, followed by four consecutive 75 bps hikes, before slowing down to a 50 bps increase again in December.

After today's decision, traders of Fed funds futures now expect the central bank to pause rate hikes at the upcoming March meeting, according to the CME FedWatch Tool.

Expectations for a pause in March were at 28% before the meeting, compared to a 33% probability of a 25 bps hike. After the Fed's statement, traders now see a 13% chance of a 50 bps increase.

Bitcoin's price briefly rose to $42,000 following the Fed statement, before paring some gains and trading up 1.2% over the past 24 hours. The broad-based CoinDesk 20 Index gained 2.3% during the same period.

Among U.S. stock indexes, the S&P 500 and tech-heavy Nasdaq gained 0.8% and 1.5% through the day, respectively, while the Dow Jones Industrial Average hit session highs.