FOMC Meeting: Fed Keeps Rates Unchanged, Maintains Hawkish Tone Over Inflation Concerns

The U.S. Federal Reserve has again kept interest rates unchanged for the fifth consecutive FOMC meeting. This Committee also continues to raise inflation concerns, prompting predictions that there will be at least one Fed rate cut this year.

Fed Leaves Rates Unchanged At FOMC Meeting

In a press release, the Fed announced that it would maintain the target range for the federal funds rate at 3.50% to 3.75%. This Fed rate decision comes in line with expectations despite forecasts of a surprise rate hike as inflation concerns mount.

The Committee voted 9 to 3 in favor of the Fed rate decision. Fed presidents Beth Hammack, Neel Kashkari, and Lorie Logan dissented in favor of a rate hike. This marks the fifth consecutive FOMC meeting that the Fed has held rates steady, while this was notably Kevin Warsh’s second meeting as Fed Chair.

As CoinGape reported, there was the possibility of a surprise Fed rate hike today, which threatened to trigger a major downtrend in the crypto market. Bitcoin had fallen below the psychological $64,000 earlier today as traders braced for a potential hike.

The leading crypto has rebounded above this psychological level following the rate decision at today’s FOMC meeting. The Bitcoin price is currently trading at around $64,400, up less than 1% today, according to TradingView data.

Inflation Remains Elevated

The Fed stated that inflation remains elevated relative to their 2% goal, in part thanks to the supply shocks that have driven price increases, including in the energy sector. Specifically, the U.S.-Iran war has driven oil prices,  sparking inflation concerns.

This has led to expectations that the Fed is likely to hike rates sometime this year. Data from the top crypto prediction market platform Polymarket currently shows a 70% chance of a hike this year, with the odds rising since the U.S. and Iran violated their MOU agreement and restarted the war.

The Fed rate hike could come as soon as the next FOMC meeting in September. CME FedWatch data shows an almost 70% chance that the Fed will hike rates by 25 basis points (Bps). Meanwhile, there is a 28.1% chance that they will hold rates steady again.