Federal Reserve to Hold Interest Rates Until June, Crypto Traders Predict

Crypto traders are currently predicting that the Federal Reserve will not lower interest rates until the June FOMC meeting. This comes as crypto market participants price in the likelihood that the Fed will hold rates steady at tomorrow’s FOMC meeting, after making three consecutive rate cuts last year.

Federal Reserve Likely To Hold Rates Steady Until June FOMC: Polymarket

Polymarket data shows a 70% chance that the Fed will lower interest rates by June, with the next rate cut likely coming at the June FOMC meeting. There is only a 16% and 30% chance of a rate cut at the March and April FOMC meetings, respectively.

The odds of a rate cut by June have climbed just ahead of tomorrow’s FOMC meeting, where the Federal Reserve is likely to hold rates steady. There is only a 1% chance that they lower rates, according to Polymarket data.

A potential decision to hold rates steady tomorrow comes on the back of three rate cuts last year, made amid concerns about weakness in the labor market. However, the labor market appears to be rebounding, as evidenced by recent jobless claims data and December’s jobs report.

As such, the committee is likely to adopt a wait-and-see approach moving forward. The December FOMC minutes showed that the Federal Reserve is open to further rate cuts this year if inflation trends down toward their 2% target.

June Timeline Coincides With New Fed Chair Tenure

It is worth noting that a rate cut at the June FOMC meeting is a huge possibility, as Jerome Powell will no longer be the chair by then, with his term ending in May. As CoinGape reported, BlackRock’s Rick Rider is currently the favorite to replace Powell as the Fed chair.

There is currently a 46% chance that U.S. President Donald Trump will nominate Rieder, according to Polymarket data. Rieder has already signaled that he could support an immediate rate cut, having said that interest rates should be as low as 3%.

The 3% target aligns with the number of rate cuts crypto traders expect the Federal Reserve to make this year. Polymarket data shows a 26% chance of three Fed rate cuts, 23% chance of two cuts, 16% chance of 4 cuts, and a 13% chance of just one cut.

Fed rate cuts are significant for the crypto market, as they could inject more liquidity into these assets and lead to higher crypto prices. Bitcoin rose to new all-time highs (ATHs) last year, just before the FOMC cut rates at the September and October meetings.