US Federal Reserve (Fed) Board Member Stephen Miran reiterated the need for a more rapid and deep interest rate cut, sparking a new wave of optimism in the cryptocurrency markets. Miran's remarks reignited ongoing discussions within the Fed, which has long maintained a tight monetary policy. Investors, believing this stance meant liquidity could increase sooner than expected, fueled their appetite for buying crypto assets.
Speaking at the "Managed Funds Association Policy Outlook 2025" event held in New York on Tuesday, October 7th, Miran stated that the "neutral interest rate" had fallen compared to last year. He noted that this situation made the current policy stance "more restrictive than expected," and warned that keeping interest rates high for an extended period could lead to an unnecessary slowdown. In his view, the appropriate interest rate range should be around 2.0–2.5 percent, well below the current 4.00–4.25 percent.
What was the inflation statement?
Miran stated, "I'm more optimistic than many others about inflation," arguing that the slowdown in the housing market and population dynamics would continue to reduce price pressures. He noted that he estimated the true neutral interest rate to be around 0.5 percent, but added that this rate cannot be measured directly, so policymakers should remain cautious. He also noted that artificial intelligence technologies could raise the neutral interest rate by increasing productivity in the long run, but current data does not yet reflect this effect.
Miran's "dovish" approach contrasts sharply with last year's hawkish stance. Miran, who opposed interest rate cuts at the time, attributes this policy shift to the transformation of immigration, fiscal policy, and general economic dynamics. Rising public spending and expanding labor supply, in his view, now necessitate a more relaxed stance.
The day before Miran's speech, Bitcoin reached $126,000. However, following the announcement, it fell 2.6 percent to $121,500. At the time of writing, it's trading around $122,800. Ethereum retreated to the $4,450 range after testing $4,750. BNB, on the other hand, rose 8%, becoming the week's standout altcoin.
Despite short-term market fluctuations, analysts say Miran's statements could be supportive for crypto assets in the medium term. This is because a low interest rate environment typically weakens the dollar, increasing demand for risky, low-yield assets.
If interest rate cuts are implemented, stablecoin yields and DeFi lending rates could decline; however, increased liquidity could offset this effect by stimulating on-chain activity. Furthermore, the $14 billion in institutional capital that entered spot Bitcoin ETFs in the third quarter of this year is expected to continue. This could rekindle interest in digital assets, particularly from large funds.
Miran's remarks resonated within the crypto community, with comments like "Is the era of liquidity returning?" However, Fed Chair Jerome Powell and some members remain cautious. Powell notes that the risk of persistent inflation could delay interest rate cuts. Still, Miran's call for a more lenient monetary policy has bolstered expectations of a more comfortable macroeconomic environment by the end of the year. For crypto investors, this could mean a resurgence of both market confidence and risk appetite.
