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Fed Holds Rates Steady, Says Risks of Higher Unemployment, Higher Inflation Have Risen
All eyes will now turn to Fed Chair Jerome Powell's post-meeting press conference for further clues about the central bank's thinking on monetary policy.
Updated May 7, 2025, 6:08 p.m. Published May 7, 2025, 6:05 p.m.
What to know:
- As expected, the U.S. central bank held monetary policy steady at the conclusion of its two-day meeting on Wednesday.
- Aiming to navigate the effect of the Trump tariffs, the Fed said risks to the labor market and for higher inflation have each risen.
- Bitcoin remained higher on the session at $96,600.
As was widely expected, the U.S. Federal Reserve held its benchmark fed funds rate range steady on Wednesday at 4.25%-4.50%, extending its pause on monetary easing for the third consecutive meeting.
"Uncertainty about the economic outlook has increased further," said the Fed in its accompanying statement. "The Committee is attentive to the risks to both sides of its dual mandate and judges that the risks of higher unemployment and higher inflation have risen."
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Bitcoin (BTC), which slipped back below $97,000 during the day paring gains from a late Tuesday rally on U.S.-China trade talks, was trading at $96.600 shortly after the Fed’s decision.
The decision comes as policymakers are navigating a treacherous macroeconomic landscape amid the Trump administration's global tariff rollout. Inflation remained sticky above the 2% target and questions abound of how tariffs will translate into consumer prices, while the economy showed signs of decelerating.
Market participants anticipate three rate cuts this year targeting July as the most likely first meeting to lower rates. However, Fed members have been vocal about waiting for more clarity on the impact of tariffs before changing course.
All eyes are now on Powell’s upcoming remarks at 2:30 pm ET (18:30 UTC), which could offer crucial clues on the Fed’s thinking for the upcoming months.
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Coinbase Sees Crypto Recovery Ahead as Liquidity Improves and Fed Rate Cut Odds Climb
The crypto exchange also took note of a so-called AI bubble that continues to go strong and a weaker U.S. dollar.
What to know:
- Coinbase Institutional is seeing a potential December recovery in crypto, citing improving liquidity and a shift in macroeconomic conditions that could favor risk assets like bitcoin.
- The firm's optimism is driven by rising odds of Federal Reserve rate cuts, with markets pricing in a 93% chance easing next week, and improving liquidity conditions.
- Several recent institutional developments, including Vanguard's crypto ETF policy reversal and Bank of America's greenlighting of crypto allocations, have contributed to bitcoin's rebound from recent lows.
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