Federal Reserve Chair Jerome Powell indicated no decision has been made on a September rate cut, lowering expectations and potentially slowing the crypto bull run amid persistent economic uncertainties.
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Powell’s cautious stance keeps interest rates steady at 4.25%-4.5%, reflecting elevated economic uncertainty.
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Market probability for a September rate cut dropped from 63% to 40%, signaling a slower pace for crypto market gains.
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Experts from COINOTAG note that while rate cuts typically boost crypto, ongoing tariff impacts may delay such moves.
Federal Reserve Chair Powell’s comments reduce September rate cut chances, potentially slowing crypto growth. Stay informed with COINOTAG’s latest insights.
Why Has the Federal Reserve Delayed a September Rate Cut?
Federal Reserve Chair Jerome Powell’s recent statements confirm no predetermined decision on a September rate cut, emphasizing economic data dependency. The Fed maintained interest rates between 4.25% and 4.5%, citing persistent uncertainty in the economic outlook. Powell highlighted rising tariffs contributing to inflation pressures, which complicates the case for immediate rate reductions.
How Do Tariffs Affect Inflation and Rate Decisions?
Powell noted that increased tariffs are beginning to influence consumer prices in certain goods categories, pushing inflation above the Fed’s 2% target to 2.7%. This inflation persistence, combined with steady unemployment rates, challenges the justification for cutting rates soon. Bill Adams, chief economist at Comerica Bank, emphasized that these factors make a rate cut unlikely in the near term.
US interest rates remain close to their highest levels in over a decade. Source: Trading Economics
What Is the Impact of Fed’s Rate Decision on the Crypto Market?
The Fed’s decision to hold rates has lowered the probability of a September rate cut to 40%, affecting crypto market momentum. Nick Ruck, director at LVRG Research, explained that while the cautious Fed stance may slow the bull market’s pace, underlying liquidity could support a rebound. Crypto markets showed slight dips post-announcement but recovered quickly during Asian trading sessions.
What Are Market Expectations for Future Rate Cuts?
Despite the current hold, the market still anticipates one to two rate cuts before the end of the year. Apollo Capital’s CIO Henrik Andersson noted that tariff uncertainties are the primary reason for delayed cuts, and the recent dissent by two Fed commissioners—Christopher Waller and Michelle Bowman—signals internal debate on easing monetary policy.
| Interest Rate Range | 4.25% – 4.5% | 40% (down from 63%) |
How Does a Rate Cut Typically Influence Cryptocurrency Markets?
Lower interest rates usually encourage investment in higher-risk assets like cryptocurrencies by reducing returns on traditional savings. When the Fed cuts rates, crypto markets often experience upward momentum as investors seek better yields. However, current tariff-related inflation pressures are delaying such cuts, tempering crypto market enthusiasm.
Frequently Asked Questions
What factors are influencing the Federal Reserve’s rate decisions in 2025?
The Fed is closely monitoring inflation, which is currently at 2.7%, and the impact of tariffs on consumer prices. These factors, along with steady unemployment, influence the cautious approach to rate cuts.
Why did two Federal Reserve commissioners dissent on the recent rate decision?
Commissioners Christopher Waller and Michelle Bowman supported a quarter-point rate cut, reflecting differing views within the Fed on how to address inflation and economic growth amid tariff uncertainties.
Key Takeaways
- Fed’s rate hold: Interest rates remain at 4.25%-4.5% amid economic uncertainty.
- Lower rate cut odds: September cut probability dropped to 40%, slowing crypto momentum.
- Market outlook: One to two rate cuts expected later in 2025, pending economic data.
Conclusion
The Federal Reserve’s cautious approach, led by Chair Jerome Powell, signals no immediate rate cuts, impacting the pace of the crypto bull run. While inflation and tariffs remain key concerns, market expectations for future easing persist. Investors should monitor economic indicators closely as these developments unfold, with COINOTAG providing ongoing expert analysis.
