Central bank officials highlighted increasing risks of both rising inflation and elevated unemployment — a troubling combination known as stagflation — as they opted to keep the benchmark interest rate unchanged in the 4.25%–4.50% range. The decision comes as the Fed continues to assess the economic fallout of President Donald Trump’s ongoing trade conflict with the world.
During the post-meeting press conference, Fed Chair Jerome Powell stated that the U.S. economy remains in good shape but warned that tariffs are likely to significantly affect its future trajectory. Officials reiterated that it’s prudent to take a wait-and-see approach while monitoring how Trump’s significant policy changes affect economic data.
The Fed’s official statement sent a clear message: get ready for turbulence. Policymakers noted a rise in “uncertainty about the economic outlook,” directly citing the inflationary pressure from escalating tariffs and the increasing risk to jobs.
Wednesday’s decision to hold rates steady followed a very public push by President Trump in recent weeks, urging the Fed and Powell to cut rates. Trump sharply criticized Powell for what he called “too slow” policy decisions, even going so far as to call him a “Major Loser” on social media.
Although a rate cut wasn’t expected at this meeting, markets had been hoping for at least a dovish tone. Instead, Powell struck a cautious note, saying, “we’re not in a hurry.”
Following the announcement, Wall Street saw a shift in momentum. The S&P 500 dipped 0.3%, the Nasdaq fell 0.5%, and the Dow Jones managed to hold onto a 200-point gain, lifted by a strong earnings report from Disney.
Meanwhile, crypto traders reacted swiftly to Powell’s comments about elevated inflation risks and absence of immediate rate cuts.
BTCUSD rose 2% early Thursday, reaching $99,400 as traders responded positively to Powell’s remarks.The lack of surprises reassured crypto markets — no rate cuts, but no panic either. In this case, no news was good news.
Bitcoin has now posted gains for four consecutive days and is up 33% over the past month, rebounding steadily from its early-April low of $74,000. That rally has been fueled by renewed risk appetite, increased institutional investment, and the persistent narrative that Bitcoin performs well when macroeconomic conditions grow too complex for traditional assets to handle.
