Fed Slashes Rates: Wednesday’s Cut Sparks Market Frenzy, But Uncertainty Looms Ahead

Markets surge as Fed delivers anticipated rate cut—but the real drama unfolds in the murky path forward.

Policy Pivot or Panic Move?

The central bank's decision sends crypto soaring while traditional analysts scramble. Bitcoin flashes green as liquidity pumps through digital veins.

Forward Guidance Fog

No clear signals emerge from the Fed's cryptic messaging. Traders parse every syllable while DeFi yields tighten—smart money already positioning for volatility.

Wall Street's Crystal Ball Looks Cloudy

Traditional finance clings to outdated models while crypto natives stack satoshis. Another reminder: bankers forecast rates like meteorologists predict rain—with equal accuracy.

Two More Rate Cuts This Year?

The headline for markets was that two more 25-basis-point rate cuts are coming this year—presumably one each at the Fed’s next meetings in October and December.

That, however, is based on the median projection from the 19-member Federal Open Market Committee, where two clear camps are forming.

The slightly bigger one won the day, tilting the median Fed view toward two cuts this year. Nine officials support that action, while one would back an even more aggressive cut that would slash rates to just below 3%. That is presumably the Fed's newest governor, Stephen Miran, who had been a top WHITE House economic adviser until his confirmation to the Fed this week.

But the hawkish camp is almost as big, with nine officials signaling more restraint. Two Fed officials indicated they’d support one more cut, but six WOULD prefer the Fed keep rates as-is after Wednesday’s cut. One other member seemingly disagreed on the need to cut rates on Wednesday.

What About 2026?

Fed officials agree lower rates are needed in 2026 but hold varying views on how many.

Ultimately, the median projection shakes out to just one more cut in 2026 following the two cuts penciled in for this year. That would put the Fed’s benchmark rate at just below 3.5%. 

In recent weeks, markets have been expecting a more aggressive path of cuts in 2026. They may get their wish, Tombs wrote, since jobs data may weaken further in the months ahead and bolster the case for cuts.

“We expect the hawks to be won over by the data,” Tombs wrote.

For now, the Fed’s projections showed a “growing divide on the Committee amid a transition period for the Fed’s roster and path of monetary policy,” wrote Ian Lyngen, a rates strategist at BMO Capital Markets.

The Fed’s views could also shift as the data on inflation and unemployment change. Powell reminded the public that Fed policy is “not on a preset course” and that the Fed is in a “meeting-by-meeting situation.” 

"Rather than looking at this as certainty, I would encourage people, as always, to look at the [projections] through the lens of probability," Powell said.

Newest Dot

The Fed’s projections are anonymous, but one DOT was clearly lower than the others for 2025.

Analysts believe Miran foresaw rates going down to below 3% this year, a far more aggressive pace of easing than the rest of Fed officials forecast. 

Assuming he’s also the lowest dot for 2026, he is not alone—one other Fed official also sees a need to put rates just above 2.5% in 2026. However, 17 other Fed officials think rates should be higher than that, and some significantly so.

Powell was asked about Miran joining the Fed, and he emphasized FOMC decisions are made by committee. It is "in the DNA" of the FOMC to debate the economy's progress and convince fellow officials that a certain policy shift is necessary, Powell said.

“The only way for any voter to really MOVE things around is to be incredibly persuasive, and the only way to do that in the context in which we work is to make really strong arguments based on the data and one's understanding of the economy,” Powell said. “That's really all that matters, and that's how it's going to work.”