Fed holds rates at 3.75%-4% as Warsh cites inflation, bitcoin rebounds

What happened

The Federal Reserve left its benchmark interest rate unchanged on Wednesday, holding the range at 3.75% to 4% after a quarter-point increase in September. The pause had been widely anticipated: CME FedWatch data cited by Coinpedia showed markets assigning less than a 10% probability to another increase at this meeting. The decision was not unanimous, however, with two of the 12 policymakers voting to lift the benchmark to 4%-4.25%, according to CryptoPotato.

In its statement, the central bank pointed to economic activity running stronger than expected, noting that job gains have kept pace with the workforce and that the unemployment rate has moved little. No updated dot plot or economic projections accompanied this meeting, which shifted attention to Chair Kevin Warsh's press conference.

Warsh said financial uncertainty and elevated inflation persist in part because of geopolitical developments, described the US economy as resilient, and said the committee intends to deliver price stability. He noted that inflation has been running above the committee's objective for close to six years and said getting it down is the Fed's responsibility. Asked why the central bank would not raise rates now if a move is expected in December, he said reducing inflation is not tied to a particular date or data point but to broader objectives and a monetary policy strategy. He said politics played no role in the decision and declined to respond to comments from President Trump that rates should be lowered.

Bitcoin traded volatile around the announcement. The asset rose from $79,500 to $81,700 ahead of the meeting, slipped to $80,500 hours before the conclusion, then rebounded above $81,000 once Warsh finished speaking, CryptoPotato reported.

Why it matters

The pause leaves the policy path, rather than this week's decision, as the main question for markets. Coinpedia reported that traders see a December increase as likely, so incoming inflation and labor data will carry outsized weight in the coming weeks. The two dissents in favor of a hike also show that the hold was not a consensus view inside the committee. For crypto traders, the episode reinforced how closely bitcoin's short-term moves track macro events: the token's swing of more than $2,000 within a single day came without any crypto-specific catalyst, and the reporting notes that other macro developments later in the week could drive further fluctuations.

What the data shows

The benchmark range stands at 3.75%-4%. September's quarter-point increase was the first in more than three years, and the dissenters at this meeting favored 4%-4.25%. Coinpedia reported that markets priced under a 10% chance of a hike this week, and JPMorgan chief US economist Michael Feroli noted that Warsh needed to explain why the Fed raised after a 0.2% core PCE reading for August but may pause despite an expected 0.3% rise for September. On the price side, bitcoin moved from $79,500 to $81,700, back to $80,500 and then above $81,000 across the day.

Background

Before the meeting, Coinpedia flagged Cleveland's Beth Hammack, Dallas's Lorie Logan and Minneapolis's Neel Kashkari as possible dissenters, noting they had opposed a hold in July; two votes ultimately favored a hike. The pause followed September's increase, the first since mid-2023, after which attention turned to September inflation data. Both the CPI and the PPI showed inflation remained a major concern, though expectations for an immediate follow-up hike faded, with experts pointing to December instead. The decision also landed less than a week before the US midterm elections, a timing that put added scrutiny on the Fed's independence.

What to watch

The next scheduled signal is the December meeting, where traders currently expect action. Before then, fresh inflation and employment figures will test whether the committee's patient stance holds, and further dissents could emerge if price pressures persist. Crypto traders will also be watching the remaining macro calendar this week, which the reporting identifies as a potential source of additional volatility for bitcoin.

Questions readers ask