Fed Holds Rates Steady as Growth Slows, Bitcoin Dips

The U.S. Federal Reserve kept its benchmark interest rate unchanged at 4.25%-4.50% on Wednesday, marking the second consecutive pause after three rate cuts in late 2024. However, the Fed’s latest projections signal weaker economic growth, with 2025 GDP now expected to rise just 1.7%, down from the previous 2.1% forecast. Growth estimates for 2026 and 2027 were also revised lower.

In its statement, the Fed cited "increased uncertainty" about the economic outlook, likely referring to concerns over President Trump’s proposed tariffs. Inflation expectations also ticked higher, with core PCE inflation now projected at 2.8% for 2025, up from 2.5% in the December forecast.

The Fed’s “dot plot” still sees rates ending 2025 at 3.9%, with 2026 and 2027 projections holding at 3.4% and 3.1%, respectively. Additionally, the central bank will slow its balance sheet reduction, cutting monthly Treasury runoff from $25 billion to $5 billion starting April 1.

Markets reacted swiftly. Bitcoin (BTC) slipped to $83,500 after briefly trading above $84,000, while U.S. stocks held onto gains. The 10-year Treasury yield dipped to 4.28%, and gold remained near record highs at $3,048 per ounce.

Investors have been on edge amid concerns over Trump’s tariff threats and their potential inflationary impact. The Fed’s hawkish stance in previous meetings had already dampened hopes for near-term monetary easing, adding pressure on risk assets like stocks and cryptocurrencies.

Traders now await Fed Chair Jerome Powell’s remarks at 2:30 p.m. ET for further insights into future monetary policy moves.