Key Takeaways
- The Fed maintained rates at 4.25%-4.50%, with Powell avoiding commitments on future cuts while removing prior language on inflation progress.
- Bitcoin declined 1% following the Fed’s announcement but remains above $100K, currently trading just below $102K.
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The Federal Reserve maintained interest rates between 4.25% and 4.50% on Wednesday, while removing previous language acknowledging progress on inflation from its statement.
Fed Chair Jerome Powell indicated that future rate adjustments will be contingent on incoming data, labor market trends, and inflation developments.
Bitcoin dropped 1% after the Fed’s announcement but maintained levels above $100,000, trading just below $102,000. The digital asset had briefly dipped below $100,000 earlier in the week after China’s DeepSeek AI launch erased $1 trillion in global market value.
The central bank noted solid economic growth and stable low unemployment levels, suggesting no immediate need for rate cuts.
The meeting marks the first Federal Open Market Committee gathering under Donald Trump’s second term, with the president advocating for lower borrowing costs.
Trump’s administration’s proposed 25% tariffs on Mexico and Canada, along with a temporarily blocked federal spending freeze, complicate the economic outlook.
Market expectations for monetary easing remain active, with the CME FedWatch tool indicating a 46.5% probability of a 25-basis-point rate cut in June and a 43.5% chance in July.
Markets are pricing in less than a 40% probability of additional cuts, suggesting expectations for at most two rate cuts in 2025.
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