Hassan Maishera
TL;DR
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The Federal Reserve kept interest rates unchanged at 3.5% to 3.75% following a 9-3 vote.
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Policymakers cited persistent inflation, geopolitical uncertainty, and strong economic growth as reasons for holding rates steady.
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Bitcoin, Ethereum, and XRP posted modest gains after the announcement, with XRP leading the top cryptocurrencies.
The Federal Reserve kept its benchmark interest rate unchanged on Wednesday, opting to maintain the federal funds rate within a range of 3.5% to 3.75% despite a rare split among policymakers, while cryptocurrency markets showed little immediate reaction.
The Federal Open Market Committee (FOMC) voted 9-3 to leave rates unchanged, with three officials favoring a quarter-percentage-point increase as inflation continues to run above the central bank's long-term target.
Fed Cites Resilient Economy and Persistent Inflation
In its policy statement, the FOMC said the U.S. economy continues to expand at a solid pace, supported by strong productivity gains and business investment despite heightened uncertainty stemming from the conflict in the Middle East.
The committee acknowledged that inflation remains above its 2% objective, pointing to higher energy prices and broader supply-side disruptions as ongoing sources of price pressure.
Ahead of the announcement, expectations for another rate hike had increased. According to the CME FedWatch Tool, the probability of a 25-basis-point increase climbed to roughly 35% earlier in the day before easing ahead of the policy decision.
Bitcoin and Major Cryptocurrencies Post Modest Gains
Digital assets remained relatively stable following the Fed's announcement, suggesting investors had largely priced in the central bank's decision.
At the time of writing Bitcoin (BTC) traded around $64,250, up approximately 1% on the day; Ethereum (ETH) gained about 1% to $1,915, and XRP outperformed the largest cryptocurrencies, rising nearly 3% to $1.08.
The muted market reaction indicates that traders are now looking beyond the July meeting and focusing on the Fed's next policy moves.
Iggy Ioppe, Chief Investment Officer at Theo, said slowing inflation during June was insufficient to offset concerns surrounding higher oil prices and geopolitical risks linked to tensions between the United States and Iran.
He noted that the Fed's decision to avoid tightening monetary policy further effectively eases financial conditions over time, a factor that could remain supportive for risk assets, including cryptocurrencies, over the medium term.
However, Ioppe added that geopolitical uncertainty continues to limit the upside for digital assets, even as institutional demand through spot Bitcoin exchange-traded funds has begun to recover.
September Meeting Now in Focus
Stephen Coltman, Head of Macro at 21Shares, described the Fed's decision as a positive outcome for markets but cautioned that policymakers could face a more challenging decision at their September meeting if inflation remains elevated.
Sygnum Bank Investment Strategist Can-Luca Köymen echoed that view, saying the Fed's latest decision reflects a desire to remain flexible while monitoring incoming economic data.
According to Köymen, the current policy stance suggests the macroeconomic environment will remain restrictive for cryptocurrencies in the near term but does not indicate a significant deterioration in market conditions.
With interest rates unchanged and inflation still above target, investors are expected to closely monitor upcoming inflation, employment, and economic growth data for clues on whether the Federal Reserve will resume tightening later this year.
