[News]Fed Holds Rates Steady, Projects Two Cuts in 2025 — Market Eyes Trump Tariff Fallout

In its latest policy decision, the U.S. Federal Reserve (Fed) has voted unanimously to keep interest rates unchanged at 4.25%–4.5%, while signaling the possibility of two rate cuts before the end of 2025. Fed Chair Jerome Powell emphasized a cautious approach, particularly in light of the potential ripple effects from newly proposed tariffs by former President Donald Trump.

Key Takeaways:

Fed holds rates steady, eyes two potential cuts in 2025.
Inflation and unemployment forecasts revised upward.
Trump’s tariff policy could impact future decisions.
Crypto markets watch closely for macroeconomic cues.

Rates Hold Steady Amid Uncertainty

At the June 19 FOMC meeting, policymakers unanimously agreed to maintain the current federal funds rate range. While inflation data remains elevated, the Fed acknowledged growing signs of economic cooling—making future policy adjustments increasingly complex.

The Fed’s updated Summary of Economic Projections (SEP) reflects this tension:

Inflation for 2025 is now expected to hit 3%, up from 2.7%.
GDP growth was revised down to 1.4% from a prior estimate of 1.7%.
Unemployment is projected to tick up to 4.5%, indicating a slower labor market.

Divided Opinions Inside the Fed

While the median projection suggests two cuts in 2025, the Fed’s dot plot reveals a growing divergence in internal views:

7 members now expect no rate cuts in 2025 (up from 4 in March).
2 members forecast a single cut.
10 members anticipate two or more cuts by the end of next year.

This split underscores a broader debate within the Fed: how to balance sticky inflation with a slowing economy and softening labor indicators.

“Uncertainty remains high—no one is overly confident in their forecasts,” said Powell during the press conference.

Trump’s Tariffs Could Complicate Things

Adding to the uncertainty is Trump’s newly proposed wave of tariffs, implemented earlier this year. While the full economic impact is yet to materialize, Powell warned that “these costs will eventually be borne by someone,” suggesting that consumers and businesses could feel the pinch.

Although May’s core inflation figures came in lower than expected, Powell cautioned against complacency, stating that the Fed needs to “watch and wait” before making major policy changes.

Labor Market Resilient, But Risks Remain

The Fed chief highlighted continued strength in employment and wage growth. While the housing sector has slowed due to high rates and supply constraints, the broader economy remains resilient.

“We’re not seeing any labor market signals that suggest rate cuts are necessary yet,” Powell said.

That said, he acknowledged the broader uncertainties that still hover over the economy—from geopolitical tensions to fiscal policy shocks.

Internal Cuts, External Pressure

In an unrelated move, the Fed announced it would reduce its workforce by 10%, as part of a broader initiative to manage public resources more efficiently. When asked about political pressure from Trump to lower rates, Powell remained firm:

“Our focus is to do our job—maintaining price stability and supporting the labor market.”

Why This Matters to Crypto Investors

For the digital asset community, the Fed’s cautious stance offers two insights:

Stability in policy means reduced volatility for crypto markets in the near term.
Future rate cuts could renew risk appetite, potentially benefiting Bitcoin and DeFi assets.

The mention of inflation, employment, and tariffs shows how macroeconomic conditions continue to be tightly linked with crypto market sentiment. With traditional financial conditions uncertain, decentralized alternatives remain a compelling hedge.

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Disclaimer: Cryptocurrency investments are subject to high risk. Always do your own research and consider seeking advice from a financial professional.