The Federal Reserve held interest rates steady on Wednesday, prolonging a months-long pause on rate cuts amid economic uncertainty fueled by U.S. President Donald Trump’s tariffs.
The price of Bitcoin and other cryptocurrencies, which rose on Wednesday morning, was roughly flat immediately after the central bank stood pat for a third consecutive time but was still up 4% over the past 24 hours to trade at about $84,500, according to data provider CoinGecko.
The U.S. central bank’s decision was widely expected, leaving its benchmark rate at 4.25% to 4.50% after the Fed began slashing borrowing costs in the final quarter of last year.
In a statement, the Fed emphasized a wait-and-see approach on how Trump’s policy maneuvers—which have battered stocks and crypto—could draw out its inflation fight.
“Uncertainty around the economic outlook has increased.,” the Fed said. “The Committee will continue to monitor the implications of incoming information for the economic outlook.”
In remarks following the announcement, Federal Reserve Chair Jerome Powell said the central bank’s latest inflation forecast was “a little higher than projected with December."
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“It is going to be very difficult to have a precise assessment of how much of inflation is coming from tariffs,” he said, adding that price pressures from Trump's trade policy may prove transitory.
At the same time, Powell said "recent indications point to a moderation in consumer spending," signaling that one of the U.S. economy's main drivers of economic growth may cool.
An updated forecast weighing expectations from 19 Fed officials showed two rate cuts this year, effectively matching policymakers’ outlook in December. The Fed’s previous projections had poured cold water on risk assets, as Fed officials had previously penciled in four rate cuts.
In December, however, one Fed official foresaw as many as five rate cuts this year, or a reduction of 1.5% in the Fed’s benchmark rate. On Wednesday, no fed official envisioned more than three rate cuts this year, suggesting a firmer policy outlook.
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The president’s approach to tariffs has sparked inflation concerns, but some fear that it may also hamstring U.S. economic growth as consumers and businesses face elevated costs.
The prices of Ethereum and Solana dipped in the hour but are up 7.7% to $2000, and 5% to $129.50, respectively, according to the crypto data provider Coingecko.
The Consumer Price Index (CPI) came in cooler than expected a week ago, indicating that inflation eased slightly last month. The widely watched inflation gauge, which rose 2.8% in the twelve months through February, was above the Fed’s 2% goal.
The Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation measure, is expected to show a 2.7% annual increase later this month, per Trading Economics. Yet Powell struck an ominous tone about price trends: "People are unhappy, and they are not wrong that prices went up a lot," he said.
Prior to Wednesday's interest rate decision, Fed futures traders foresaw a 51% chance that the central bank cuts interest rates in June, according to CME FedWatch. Those remained a tossup as market participants mulled the Fed’s latest projections.
UPDATE (March 19, 2025, 2:41 p.m. ET): Revises headline to reflect change in bitcoin's price.
UPDATE (March 19, 2025, 3 p.m. ET): Adds Powell comments.
Edited by James Rubin
