Catenaa, Thursday, March 20, 2025- The Federal Reserve held interest rates steady Yesterday (Wednesday), maintaining them between 4.25% and 4.5%, citing increased uncertainty in the economic outlook. Stocks recently plummeted, and executives reported declining consumer confidence.
Fed Statement can be read here.
The Federal Open Market Committee (FOMC) also announced a slowdown in its quantitative tightening program, adjusting the monthly Treasury redemption cap from $25 billion to $5 billion beginning in April.
“Recent indicators suggest that economic activity has continued to expand at a solid pace,” the Fed said in the statement, noting stable unemployment and persistent inflation.
However, it warned that “uncertainty around the economic outlook has increased.”
Markets are closely watching the Fed’s next moves, with the CME FedWatch tool indicating only a 16% probability of a rate cut in May but higher chances later in the year. The FOMC projected two rate cuts by year-end.
Crypto markets reacted swiftly, with Bitcoin rising 3.5% and altcoins such as Ethereum and Solana gaining up to 9%. Analysts suggest a short-term relief rally, though some remain cautious. “While we may be overdue for an oversold bounce, today’s meeting will likely have little long-term effect on markets,” said strategist Chris Cox.
Meanwhile, Bernstein analysts forecast Bitcoin could peak at $200,000 by late 2025, though macroeconomic uncertainties and potential political disruptions could extend the cycle into 2026.
The Fed said the economy’s current strength provided a buffer, allowing time to assess the impact of fiscal and trade policies, particularly those of the Trump administration. President Trump’s tariffs have created global trade uncertainty, with fluctuating policies complicating economic forecasts.
Investors expressed concern about the Fed’s confidence in its projections, given the lack of economic forecasts in the meeting’s commentary.
The US economy remains relatively stable with low unemployment and moderate inflation, giving the Fed room to maneuver.
However, signals of a potential slowdown are emerging, including lower-than-expected job growth and rising layoffs. Inflation remains above the Fed’s target and could worsen with Trump’s policies.
The Fed also reiterated its readiness to adjust monetary policy if risks arise, emphasizing its commitment to stable prices and maximum employment.
