Fed Holds Rates Steady, Powell Signals Caution

Federal Reserve Keeps Interest Rates Unchanged

The Federal Reserve has announced that it will keep interest rates steady at the 4.25% to 4.5% range, in line with market expectations. This decision comes after the US Federal Open Market Committee (FOMC) meeting today. The Federal Reserve’s decision could be bearish for risky assets like cryptocurrencies.

Fed Chair Jerome Powell has indicated that the central bank is in no hurry to adjust its policy stance. In a press conference following the FOMC meeting, Powell stated that the Fed is comfortable with its current interest rate stance and is entering a wait-and-see phase. The Fed has hit the pause button on rate cuts and is now assessing whether to cut rates from their recent two-decade high and by how much.

Powell also noted that inflation remains slightly above target, and labor market conditions are solid. The Fed is satisfied with its current rate stance and is not rushing to lower the key benchmark interest rates. The central bank will proceed more cautiously with any rate cuts and will be guided by incoming data, labor market trends, and inflation developments.

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.

The crypto market has remained relatively stable following the Fed’s announcement, with Bitcoin declining 1% after the news but maintaining levels above $100,000. 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 Fed’s decision to keep interest rates unchanged comes as President Donald Trump returns to the White House. Media questions during Powell’s press conference may focus on the potential impacts on the economy and the Fed’s future actions. The Fed has signaled a slowdown in interest rate cuts due to the strong performance of the American economy, which seems to clash with Trump’s policy stance.

Inflation data for January 2025 will be released on February 12 at 8:30 AM ET, and markets will be