Monetary reversal in the US: the Fed cuts interest rates for the first time in four years. Here's how cryptocurrencies react to the interest rate cut.

The Fed is cutting US interest rates to 5.0%. The central bank announced this in a press release. With this, the interest rate turn desired by financial markets since the beginning of the year is now becoming a reality.

The monetary rate change was expected in advance by the majority of market participants. According to official polls 61% of respondents correctly counted on two rate cuts, while 39% expected only one rate cut.

In the hours following the interest rate hike, the crypto market remained cautious. The Bitcoin price fell 0.2% from the previous day to $60,460. The second-largest cryptocurrency, Ether (ETH), stood at $2330, representing a 0.8% price drop in the same period. A day later, however, prices did respond positively. BTC is up 2.85% in the plus, while ETH is up 3.7% from a day earlier.

A major reason for the interest rate turn announced by Fed Chairman Jerome Powell appears to be the recent trend in consumer prices. Compared to the same month last year, they rose by only 2.5% in August - that is 0.4 percentage points less than in July.

With this decision, the Federal Reserve could have ended its policy of monetary tightening and moved to a phase of monetary easing.

A major motivation for this is the US national debt, which has reached a record high. Due to high interest rates, the U.S. government currently has to pay over a trillion dollars just for the interest payments.

Nevertheless, the Fed is still keeping interest rates significantly higher than its European counterpart in Frankfurt am Main. ECB interest rates currently stand at 3.5%. Last week, the again an interest rate cut is taking place for the euro zone.

On Wednesday night, the top U.S. monetary executive was answering questions from reporters. Powell stated, "We are trying to reach a situation where we can restore price stability without a painful rise in unemployment, which sometimes accompanies such inflation."