Fed Holds Rates at 4.25% - 4.50% Amid Inflation Concerns

The Federal Open Market Committee (FOMC) unanimously decided to maintain the Federal Funds Rate at 4.25% - 4.50% during its June meeting. This decision came despite the committee's acknowledgment of elevated inflation levels and a robust labor market, as indicated by a low unemployment rate. The Summary of Economic Projections (SEP) revealed that policymakers anticipate two 25 basis-point rate cuts in 2025, with an additional 25 basis-point cut projected for 2026. This adjustment reflects a more cautious stance compared to the previous SEP, which had forecasted a 50 basis-point cut for 2026.

Fed Chairman Jerome Powell reiterated during the post-meeting press conference that the committee does not feel pressured to make immediate policy adjustments. Several Fed officials have expressed openness to the idea of lowering interest rates in July, but the strong June employment report, which showed a decline in the unemployment rate to 4.1% and an increase in nonfarm payrolls by 147,000, suggests that the Fed is likely to wait until September to ease policy. The market, as indicated by the CME FedWatch Tool, sees virtually no chance of a rate cut in July and prices in about a 36% probability of another policy hold in September.

The minutes of the June 17-18 policy meeting, scheduled for release on Wednesday, will provide further insights into the discussions surrounding the policy outlook. Investors will scrutinize these minutes for clues on the Fed's stance, particularly in light of the uncertainty surrounding President Trump's tariff decisions and their potential impact on inflation. The minutes will also reveal the vote split among policymakers, offering a clearer picture of the committee's internal dynamics.

The decision to hold interest rates steady has had a stabilizing effect on markets. Bitcoin, for instance, has stabilized near $109,000, while gold's decline signals an increased risk appetite, hinting at potential gains for alternative assets. The market's reaction to the Fed's decision underscores the delicate balance between maintaining economic stability and addressing inflationary pressures. As the Fed continues to navigate this complex landscape, investors will closely monitor the central bank's communications and policy actions for further guidance.

If the Fed does not cut rates, a bull run is unlikely in the near future. Due to the postponed tariff start to August 1, the Fed is again unlikely to reduce rates this month, and the decision for September remains uncertain. A downward trend is observed in gold prices. This suggests an increase in risk appetite. The easing of tensions with Iran and the balance of war concerns brought this decline. However, when gold rises, experts mentioned that the positive correlation between Bitcoin and gold could lead to a rise in altcoins. Nonetheless, predicting the future in crypto markets is mostly guesswork, often leading to misjudgments without magical crystal balls.

Solana (SOL) is gearing up for a new move at $154. The SSK code’s first spot ETF was listed last week on the exchange. Receiving a $20 million inflow in three trading days, the ETF saw a remarkable $21 million inflow in a single day yesterday. If the pace continues, the fund’s size could rapidly surpass the $100 million threshold. Lark Davis suggests that the downtrend line is being challenged and closures above this threshold could lead to testing the $165-180 range. Beyond this, targets include $188 and $203.