Fed Pauses Rate Hikes Again as Inflation and Recession Fears Grow

The U.S. Federal Reserve kept its benchmark interest rate unchanged on Wednesday, maintaining the federal funds rate range at 4.25%–4.50%. This marks the third consecutive meeting where the central bank extended its pause on monetary policy changes, as uncertainty grows over the economic outlook.

In its official statement, the Fed highlighted increasing concerns about both inflation and unemployment, stating that risks to its dual mandate have risen. Policymakers continue to grapple with elevated inflation levels, which remain stubbornly above the 2% target, and the economic impact of widespread tariffs introduced under the Trump administration.

Markets had largely expected the Fed to hold steady, with growing anticipation of potential rate cuts later this year. Many traders are eyeing July as a possible pivot point for the first of up to three projected rate reductions in 2025. However, Fed officials have emphasized the need for more data, particularly regarding the effect of tariffs on consumer prices, before making any shifts in policy.

Following the rate decision, Bitcoin (BTC) slipped below $97,000, trading around $96,600 after briefly gaining from optimism around renewed U.S.-China trade talks. The dip reflects broader market caution amid global economic uncertainty and monetary policy indecision.

Attention now turns to Federal Reserve Chair Jerome Powell’s press conference at 2:30 p.m. ET, where investors hope to gain deeper insight into the central bank's outlook and the conditions under which it might begin easing.

This decision reinforces the Fed’s cautious stance as it seeks to balance economic growth, inflation control, and labor market stability in a complex geopolitical environment.