The Fed Holds Rates Steady

TLDR

• The Fed is holding rates steady between 4.25% and 4.5%.
• Jerome Powell warned that many factors are in play that could have a negative impact on the overall economy, but they would have to be patient and wait and see how things pan out.
• The stock and crypto markets have pumped in response.

We love finance. When Jerome Powell is set to talk, we bust out the popcorn and hang on to every word like most people watching a new episode of Cobra Kai. Per usual, he did not disappoint. 

The Federal Open Market Committee (FOMC) has decided to keep interest rates steady, maintaining the target range for the federal funds rate at 4.25% to 4.5%. Fed decisions matter to everyone, especially if you’re tracking inflation, growth, or just trying to figure out how your Bitcoin stash might react next. Let’s get after it.

What’s Going on in the Economy?

The Fed’s decision comes at a time when they’ve been fighting inflation like it’s their main boss level. Several key indicators helped guide their call:

• Economic Growth: Despite some bumpy adjustments in net exports, the economy appears to be holding its ground and expanding at a “solid pace.” Translation? GDP isn’t tanking, and we’re not in recession-ville (at least not yet).
• Labor Market: Unemployment is currently steady at 4.2%. Payrolls have grown by about 155,000 jobs per month over the past quarter. Wages are growing but at a slower pace, which might sting your paycheck but helps keep inflation in check. According to Fed Chair Jerome Powell, “The labor market is not a source of significant inflationary pressures.”
• Inflation: While it’s cooling off compared to last year’s red-hot spikes, inflation remains a little above the Fed’s golden 2% target. Powell didn’t sugarcoat it, stating, “Inflation has come down a great deal but has been running somewhat above our 2 percent long-run objective.”

The takeaway here? The Fed’s playing a balancing act between keeping the economy chugging and trying to tame inflation without completely derailing the train.

What the Fed Said About Its Plans

The FOMC isn’t locked into this rate for the long haul. They’ve emphasized their “data-dependent” approach, which means they’re keeping an eye on how the economy plays out before making their next move. Here’s what they’re watching:

• Incoming economic data
• Labor market dynamics
• Financial and global developments (looking at you, supply chain issues and tariffs)
• Risks to their dual mandate (maximum employment and stable inflation)

Powell even hinted that if inflation rears its ugly head again or other risks emerge (cough “tariffs” cough), they won’t shy away from more rate adjustments.

For now, they’re sticking to their long-term goals, including:

• Slashing their gigantic holdings of Treasury securities and mortgage-backed securities.
• Staying laser-focused on achieving maximum employment and that coveted stable 2% inflation.

What’s the Market Saying?

After the announcement, markets reacted as if they’d just finished their morning coffee. Stocks posted gains across the board:

• Dow Jones popped up 0.7%, closing at 41,113.97.
• S&P 500 rose 0.4%, adding 24.37 points to 5,631.28.
• Nasdaq staged a comeback and climbed 0.3% to 17,738.16.

Treasury yields also dipped slightly, with the benchmark 10-year note dropping about four basis points to land near 4.27%. It’s like the markets collectively said, “Cool, nothing major to panic about.”

And Bitcoin? Back over 100k. We don’t hate it. ETH is back over 2k, and alts across the board are seeing nice pumps.

Why Should Crypto Holders Care?

Okay, but what does all this Fed talk mean for your digital assets? Unlike stocks or bonds, crypto doesn’t have a CEO or an earnings report to base its value on. It does, however, respond to interest rates and inflation in its own quirky, volatile way:

• Lower Interest Rates (or steady rates): These can be a green light for crypto because they often drive investors to riskier assets in search of better returns. With rates holding steady, crypto might get a bit of a breather.
• Inflation Trends: Bitcoin, often likened to “digital gold,” is seen by many as a hedge against inflation. If inflation stays high, the narrative around BTC being a store of value could get louder.
• Market Sentiment: Stocks and crypto aren’t besties, but they sometimes follow each other to the party. Most of the major tokens today, including ETH, BNB, and SOL, are up.

Keep in mind, though, that crypto doesn’t always play by the rules. It’s often influenced by other factors like technological upgrades, regulatory drama, and, of course, good old memes.

Powell’s Warning on Tariffs (Because They Might Affect You, Too)

If you think tariffs are just a big business problem, think again. The increasing tariffs announced by the new administration could push inflation higher again. 

Powell explained that they’d likely affect prices short-term, but if they linger, they could spark persistent inflation, slow economic growth, and raise unemployment.

How does this impact crypto? It’s hard to call. Tariffs might create more uncertainty in the markets, which could either boost crypto (as a hedge against traditional finance) or hurt it (if investors flee to safer assets).

HODL and Chill

Overall, we think we were handed good news from Powell and Co. this week. The Fed’s steady-handed approach this month feels like a “wait and see” game — and for good reason. They’re threading a delicate needle, balancing growth with inflation control.

For users, as someone holding or exploring crypto, this moment is an opportunity. It’s a reminder to stay informed about broader economic trends while keeping an eye on how they ripple across financial markets, including the crypto landscape.

The Fed might hold or hike, but your financial goals should stay steady. Diversify wisely, watch the data, and ride out the storms with patience. After all, whether bull or bear, the long game often wins.