Fed Holds Rates Steady, Powell Signals Caution Amid Trump's Rate Cut Call

Federal Reserve Keeps Interest Rates Unchanged, Powell Signals Caution on Policy Adjustment

The Federal Reserve has kept interest rates unchanged at 4.25% to 4.5%, signaling a wait-and-see approach to policy adjustment. Fed Chair Jerome Powell indicated that future rate adjustments will be contingent on incoming data, labor market trends, and inflation developments.

Powell's comments suggest that the Fed is comfortable with its current interest rate stance and is not in a hurry to make further adjustments. The Fed's decision to keep rates steady comes despite President Trump's call for a rate cut.

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. However, markets are pricing in less than a 40% probability of additional cuts, suggesting expectations for at most two rate cuts in 2025.

The crypto market has remained relatively stable following the Fed's announcement, with Bitcoin declining 1% but remaining above $100,000. The central bank noted solid economic growth and stable low unemployment levels, suggesting no immediate need for rate cuts.

The Fed's decision 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 participants will now turn their attention to the next FOMC meeting and comments from Powell on future rate cuts. Any unexpected developments or surprises will likely be the key drivers of Bitcoin's price action.