Fed Holds Rates Steady as Powell Flags Inflation Concerns. Two Cuts Are Still on the Cards.

Forward guidance for 2025 was trimmed by a rate cut. Markets liked it as all three major indexes rose on the news. Bitcoin, Ether joined the party.

👊 Fed Stays Put on Interest Rates

• The Federal Reserve maintained a steady hand on interest rates USINTR, in line with analyst expectations, as it wrapped up its two-day regular policy meeting. Borrowing costs remained unchanged at 4.5% but the central bank updated its forward-looking guidance, not entirely a surprise to markets.
• Given the challenging outlook on inflation and growth ahead — mainly due to Trump’s tariff uncertainty — the Fed’s economic projections showed 11 out of 19 officials expected two cuts to interest rates this year, with just two wishing for three rate trims.

🎁 Inflation Up, Growth Down

• Inflation was marked up, again thanks to Trump’s tariff jitters, to 2.7% this year, up from 2.5% in January. Fed bankers believe inflation will gradually ease back toward the desired rate of 2% in 2026 and 2027. Expectations on GDP growth — a big one for market watchers — was downwardly revised to 1.7% in 2025 from 2.1%.
• All in all, Trump’s unpredictable policy setting is making it difficult for central bankers to plan their moves and anticipate any meaningful economic changes related to inflation, growth and employment.

📈 Reactions Across the Board

• Markets were mostly rolling with Powell’s message. The Dow Jones Industrial Average DJI rallied roughly 500 points during the top banker’s speech. The S&P 500 and the Nasdaq Composite added 1.4% and 1.8%, respectively. The US dollar gained some grounds as well, but only a tiny fraction of what it had lost in the previous sessions.
• Bitcoin BTCUSD rose 3.5% to crack $86,000 a piece after languishing for days near the $82,000 mark. Ethereum was doing even better, up about 6% to break through $2,000 per coin and hit a session high of $2,070.