Bitcoin, Ethereum Steady as Fed Leaves Interest Rates Unchanged

By André Beganski

The Federal Reserve held its benchmark interest rate steady on Wednesday, formalizing a data-dependent approach to balancing the U.S. labor market against inflationary risks, amid ongoing White House pressure to accelerate monetary easing.

The decision, which was widely expected, kept the federal funds rate at a target range of 3.50% to 3.75%. The move followed three consecutive 25-basis-point cuts late last year that had sought to engineer a “soft landing” for the economy.

“Uncertainty about the economic outlook remains elevated,” the Fed said in a statement. “Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”

During its latest policy meeting, two members of the Federal Open Markets Committee broke away from the group’s decision. Stephen Miran, whose term expires this month, advocated for a 25-basis-point cut, as well as Christopher Waller. Both are Trump appointees.

In December, a 9-3 vote among FOMC members had the most dissents since 2019, with divisions emerging over the labor market’s resiliency and inflation’s persistence.

Powell suggested that the central bank is in a less difficult position than it was in December, where lowering interest rates to stimulate the economy had the potential to bolster inflation.

"We still have some tension between employment and inflation, but it's less than it was," he said. "I think that the upside risks to inflation and the downside risk probably both diminished a bit."

Bitcoin and Ethereum respectively changed hands around $89,500 and $3,000, according to CoinGecko. They had both advanced 2% over the past day, after being beaten back from their highest points in several weeks amid Trump’s renewed bid for Greenland.

With U.S. President Donald Trump expected to soon name a replacement for Fed Chair Jerome Powell, whose term expires in May, the conclusion of the central bank’s first gathering in 2026 underscored a wait-and-see approach toward changes to borrowing costs.

The decision follows the issuance of grand jury subpoenas earlier this month, as federal prosecutors pursue a criminal investigation into Powell, who framed the development as an attempt to undermine the Fed’s autonomy. 

The Fed has pointed to changes to immigration and trade policy as factors clouding its ability to get a firm grip on the direction of the economy. At the same time, data disruptions stemming from a government shutdown last year effectively erased key data points.

Earlier this month, the Bureau of Labor Statistics reported a December unemployment rate of 4.4%, which was little changed from the revised November 4.5% rate. Meanwhile, inflation clocked in at 2.7% in the 12 months through December.

Lower borrowing costs tend to be supportive of risk assets, as lower payouts on U.S. Treasuries encourage investors to seek higher returns elsewhere. Before the Fed’s decision, traders foresaw the first rate cut of the year taking place in June, per CME FedWatch.

Editor's note: This story was updated after publication to include comment from Powell.

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