Fed Rate Decision Puts Spotlight on Powell as Markets Brace for Signals

The Federal Reserve is widely expected to keep interest rates unchanged at its upcoming policy meeting, but markets are far from complacent. With futures pricing showing roughly a 96% probability that rates remain in the 3.5%–3.75% range, attention has shifted almost entirely to Federal Reserve Chair Jerome Powell’s post-meeting press conference. For traders across equities, bonds, and crypto markets, Powell’s tone and forward guidance could prove far more impactful than the rate decision itself.

After three consecutive quarter-point rate cuts, the Fed has signaled it is in no rush to ease further. Powell previously indicated that additional cuts are unlikely before 2026, a stance echoed by voting FOMC member Neel Kashkari, who recently said it is “way too soon” to resume easing. As a result, a steady-rate outcome is largely seen as a non-event unless the Fed surprises markets with an unexpected cut, which would likely weaken the U.S. dollar while boosting stocks and bitcoin.

The key debate now centers on whether the Fed’s pause is hawkish or dovish. A hawkish pause would emphasize lingering inflation risks and push back against near-term rate-cut expectations, pressuring risk assets. A dovish pause, however, would suggest that rate cuts could resume later this year, potentially lifting crypto prices. Morgan Stanley expects the Fed to maintain language suggesting it is still “considering the range and timing” of future adjustments, keeping easing hopes alive. Any dissenting votes in favor of cuts, particularly from Trump appointee Stephen Miran, could further reinforce a dovish interpretation.

Powell is also expected to address political and economic crosscurrents, including President Donald Trump’s affordability initiatives and concerns about Fed independence. Analysts warn that Powell’s defense of holding rates steady could support the dollar, weighing on bitcoin. Meanwhile, Trump’s proposed $200 billion purchase of mortgage-backed securities and restrictions on institutional home buying may stoke near-term housing inflation, adding another layer of uncertainty.

With tariffs, housing policy, and global bond market volatility in play, Powell’s words may set the tone for markets well beyond this week’s meeting.