The Federal Reserve kept interest rates unchanged today, maintaining the target range at 3.5%–3.75%. Chair Jerome Powell acknowledged that inflation remains above the Fed’s comfort zone, offering a historical comparison:
“I always have to point out that that was a 1970s term, at a time when unemployment was in double figures, and inflation was really high,” he said. “We actually have unemployment really close to longer-run normal, and we have inflation that’s 1 percentage point above that.”
Market Reaction
The decision rattled speculative markets. Bitcoin and Ethereum both slipped more than 4%, with ETH trading at $2,195.38, down over 5% since yesterday. Traders cited sticky inflation as the key driver, noting that higher rates tend to weigh on risk assets.
Meanwhile, traditional markets showed signs of resilience. The yield on 2‑year U.S. Treasuries rose to 3.79%.
This suggests that investors expect rates to remain elevated for longer. That shift highlights a familiar dynamic: when inflation fears grow, capital often flows out of crypto and into government debt, seen as a safer store of value.
Outlook
With Powell signaling that inflation is still above target, analysts expect the Fed to keep borrowing costs high until clearer signs of price stability emerge. For crypto investors, that means continued headwinds. Unless inflation eases, speculative assets may struggle to regain momentum while treasuries and other fixed‑income instruments attract inflows.
