Federal Reserve’s Rate Decision
The Federal Open Market Committee (FOMC) left the federal funds rate unchanged at a target range of 3.50% to 3.75%. The decision, widely anticipated, follows three consecutive 25‑basis‑point cuts made late last year in an effort to engineer a “soft landing” for the economy.
Dissent Within the Committee
Two members broke from the consensus. Stephen Miran, whose term ends this month, and Christopher Waller—both Trump appointees—advocated for an additional 25‑basis‑point cut. Their dissent marked the most divided vote (9‑3) since 2019, reflecting sharp disagreements over labor‑market resilience and inflation persistence.
Economic Data Behind the Hold
The Fed cited “elevated uncertainty” about the outlook. Recent data showed a December unemployment rate of 4.4% (little changed from November’s 4.5%) and inflation at 2.7% year‑over‑year. These figures suggest modest labor‑market slack but still‑elevated price pressures.
Market Reaction: Bitcoin and Ethereum
Crypto assets rallied after the announcement. Bitcoin traded around $89,500 and Ethereum near $3,000, each up roughly 2% on the day. The gains came after the assets had been pushed back from recent multi‑week highs amid political headlines.
Political Context and Future Outlook
President Donald Trump is expected to name a new Fed chair to replace Jerome Powell, whose term expires in May 2026. The decision also arrived amid a grand‑jury subpoena investigation into Powell, which the Fed framed as an attempt to undermine its independence.
Key Takeaways
- The Fed kept rates steady at 3.50%‑3.75% despite internal dissent.
- Unemployment remains modestly low (4.4%) while inflation stays above the 2% target (2.7%).
- Crypto markets responded positively, with Bitcoin and Ethereum each gaining about 2%.
- Political uncertainty—potential new Fed chair and legal scrutiny of Powell—adds to market volatility.
- Traders had previously expected the first rate cut of the year in June, but the hold suggests a more cautious path forward.