Bitcoin, Ethereum Waver as Fed Holds Interest Rates Steady
Why it matters: The Fed's cautious stance and global uncertainty are creating volatility for crypto investors.
- Federal Reserve held its benchmark interest rate steady at 3.50% to 3.75%, a widely anticipated move that prolonged a pause in rate adjustments.
- Bitcoin and Ethereum saw daily declines of 3.6% and 5.3% respectively following the Fed's announcement, though both cryptocurrencies maintained weekly gains.
- FOMC members were split on the decision, with Stephen Miran advocating for a 25-basis-point interest rate cut, underscoring internal disagreement on monetary policy.
- Geopolitical tensions in the Middle East, particularly the U.S.-Israel war with Iran, were cited by the FOMC as a source of "uncertainty" for the U.S. economy and a factor in surging energy prices.
- Fed's outlook indicates a "wait-and-see" approach to future rate cuts, with policymakers' median forecast for core PCE inflation rising to 2.7% from 2.5%.
The Federal Reserve held interest rates steady for the second consecutive meeting, maintaining a cautious stance amid rising energy costs and global uncertainty, which led to a dip in Bitcoin and Ethereum prices despite weekly gains. The decision was not unanimous, with one FOMC member advocating for a rate cut, highlighting the ongoing debate within the central bank regarding balancing inflation and a cooling job market.
