Just listened to Powell’s speech after the Fed’s decision to cut the rate by 0.25 percentage points. And this is not what the bulls would have expected at all. The key point is that further rate cuts in December are by no means guaranteed. Powell said outright that this is not a predetermined scenario, and there are different views within the Fed regarding the future strategy.

The market understood that immediately. Bitcoin in the moment fell below $110,000; the correction low reached $109.2k. Then they bought back a little, and the price returned closer to $111k, but the mood clearly changed.

What’s important from Powell’s speech:

On inflation, the situation remains tense. Yes, the consumer price index is slightly below expectations, and long-term inflation expectations overall align with the Fed’s goals. But Powell emphasizes that inflation is still elevated. PCE rose by 2.8%, disinflation in services continues, but that doesn’t mean the problem is solved. Plus, tariffs are starting to affect the prices of goods. The Fed assumes this is a short-term effect, but commits to not allowing it to become a persistent problem.

The labor market is clearly weakening. Demand for labor has decreased, and layoffs and hiring remain at low levels. At the same time, Powell уточняет—this is not a rapid decline, but a gradual slowdown. Jobless claims are not increasing, and the number of open vacancies is getting smaller. The situation remains stable, but it’s clearly moving toward weakening.

And this is where the main takeaway from Powell’s speech comes in: Fed members significantly diverge in their views about further actions. A cut in December is not certain—rather, the opposite. The decision about further reductions has not yet been made. Today’s 0.25 cut was a risk-management measure, but in the future, things could be different.

Powell also noted that the risk balance has changed—there is no risk-free path. The Fed cannot simultaneously address employment issues and inflation risks with a single tool. This is an acknowledgment that Fed policy is in a difficult situation.

Another point from the speech concerns the balance sheet. In December, the next phase will begin, which will be stable for some time. But at a certain moment, the Fed will start replenishing reserves again. A transition to a shorter balance-sheet horizon is planned, but the endpoint has not yet been defined. Reserves are currently slightly above the adequate level.

Conclusion: Powell’s speech showed that the Fed is in a wait-and-see mode. There are no guarantees for December. If the labor market stabilizes or strengthens, that will affect decisions. This explains why the market reacted so nervously. Investors had hoped for a more dovish position, but they got caution and uncertainty.