The Federal Reserve has maintained benchmark interest rates between 4.25% and 4.5% amid persistent economic headwinds, diminishing expectations for near-term monetary easing that could impede the ongoing cryptocurrency market rally. Chair Jerome Powell emphasized continued uncertainty in the economic outlook, citing unresolved inflationary pressures and geopolitical factors as core reasons for the decision.
Market projections for a September rate cut plunged to approximately 40% following the announcement, down significantly from prior estimates. This shift signals reduced liquidity expectations that historically fuel risk assets like cryptocurrencies. Inflation remains a key concern, persistently hovering at 2.7% and exceeding the Fed’s 2% target, partly driven by recent trade tariffs and structural economic challenges.
While crypto markets initially dipped post-announcement, they demonstrated resilience with notable recovery during subsequent Asian trading sessions. Analysts now anticipate only one or two potential rate cuts later in the year, contingent upon evolving inflation and employment data. This cautious monetary approach presents headwinds for the cryptocurrency sector, potentially decelerating momentum within the current bull market cycle.