The Fed Maintains Its Rates: What Impacts On The Economy And Cryptocurrencies?

Major monetary decisions have been made in the United States, with global economic repercussions. Analysts were eagerly awaiting the choices of Jerome Powell and the American Federal Reserve. Ultimately, those hoping for a change were left disappointed: the FED decided to keep its rates between 4.25% and 4.50%. An announcement that certainly prompted reactions from financial markets.

American economy: the FED maintains its rates, what risks for growth?

Crash or rally ? The stability of the FED’s benchmark rates was anticipated, but it does not resolve economic tensions. The Federal Open Market Committee (FOMC) faces a dilemma: maintain growth without rekindling inflation. Some experts fear stagflation, fueled by tariff hikes by Donald Trump and budget cuts.

The economic context remains fragile:

• A labor market losing momentum with rising layoffs;
• Revised growth forecasts downwards;
• Consumption slowing down due to high rates.

Wall Street reacted cautiously well before the announcement, with major stock indices recording a slight increase. But for how long? Should the FED adjust its policy before the situation worsens further?

Inflation: an unstable balance for the FED

The FED justifies its decision by the need to keep inflation within its 2% target. After aggressive hikes since 2022, the American central bank is playing it safe. Yet, the question remains: by tightening the taps, is it not at risk of stifling activity?

The stagflation scenario worries economists. A prolonged economic slowdown combined with persistent inflation could force the FED to reconsider its strategy sooner than expected. Moreover, some economists are concerned about the cumulative effects of the high rate policy and financial market volatility.

Jerome Powell remains firm:

“We remain vigilant regarding the evolution of the economy and will adjust our policy accordingly.”

But the market cannot wait indefinitely. Pressure is building and investors are already anxiously scrutinizing the next decisions of the FOMC.

Bitcoin and Ethereum: a reactive crypto market

The crypto market was hanging on the words of the FED. The announcement of the monetary status quo had a mixed effect. Bitcoin, which had been in a bearish phase for two months, could see a resurgence, with some analysts already foreseeing a rebound above 90,000 dollars.

Ethereum, for its part, has already surged by 6% (7.5% at the time of writing this article), benefiting from a bullish momentum ahead of the FOMC meeting. According to Markus Thielen, CEO of 10x Research:

“We could see a counter-trend rally, with prices being oversold.”

The impact of monetary decisions on cryptocurrencies is undeniable. Investors are watching for the end of the quantitative tightening program and hoping for eased financial conditions. In the meantime, volatility remains the keyword in the crypto market.

The FOMC is a major event that can influence financial and crypto markets. Its impact on the stock market and monetary policy is closely monitored, as a simple announcement can reshape the strategies of traders and investors. Those who know how to exploit it can see their performances multiplied.