Federal Reserve holds rates steady at 3.5%-3.75% as inflation hawks circle inside the FOMC

The Federal Reserve just pulled back the curtain on what happened inside the June 16-17 FOMC meeting. The Committee voted unanimously to keep the federal funds rate parked at 3.5% to 3.75%, but behind that 12-0 consensus, a real argument was brewing about what comes next.

The minutes, published on July 8, show that a faction of participants pushed for immediate rate hikes. They didn’t get their way this time.

The inflation problem that won’t quit

The 12-month Personal Consumption Expenditures rate, the Fed’s preferred inflation gauge, clocked in at 3.8% in April. That’s nearly double the 2% target. Projections suggest the May reading could jump to 4.1%. The culprits are external: energy price shocks tied to geopolitical tensions and surging demand from the artificial intelligence buildout.

The labor market, meanwhile, isn’t giving the Fed much cover to act dovish. Unemployment held steady at 4.3%, and GDP growth remained solid, particularly in AI and productivity-adjacent sectors.

Most participants projected scenarios where inflation might eventually drift back toward 2% on its own. A few members clearly weren’t buying that optimistic read and wanted to tighten now rather than risk falling further behind the curve.

The rate has been unchanged since December 2025, making this a prolonged hold.

Kevin Warsh’s first act: hold the line

This meeting marked the first policy decision under newly appointed Chair Kevin Warsh. Warsh chose consensus over action, delivering a unanimous hold.

The “upside risks to price stability” language that appeared throughout the minutes is Fed-speak for “we’re more worried about inflation accelerating than slowing.”

What this means for crypto investors

Bitcoin traded in a range between $64,150 and $65,600 following the release of the minutes. Ether took a harder hit, declining approximately 3.6%.

The internal split revealed in these minutes is arguably more important than the rate decision itself. A unanimous hold where several members wanted to hike tells the market “we’re one bad inflation print away from tightening.”

The May PCE reading, expected to show a jump to 4.1%, becomes the next critical data point. If it confirms what the Fed fears, the hawks inside the committee will have ammunition to push for action at the July or September meeting.

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