Fed Holds Rates Steady Again as Trade Tensions Cloud Economic Outlook; Markets Eye Powell

In a widely anticipated move, the U.S. Federal Reserve kept its benchmark interest rate unchanged at 4.25%–4.50% on Wednesday, marking the third straight meeting without a policy shift as officials weigh growing risks from both inflation and a slowing economy.

“The outlook has become more uncertain,” the Fed said in its post-meeting statement. “Risks to employment and inflation are both rising,” underscoring the delicate balancing act policymakers face as global trade disputes escalate.

The decision arrives amid heightened concerns over the economic fallout from the Trump administration’s broadening tariff regime. With inflation still running above the Fed’s 2% target and signs of cooling in GDP growth, the central bank appears hesitant to move in either direction too quickly.

Bitcoin (BTC), which had rallied above $97,000 late Tuesday on optimism surrounding renewed U.S.-China trade talks, lost momentum following the Fed news, slipping to around $96,600.

Wall Street is still penciling in three rate cuts in 2025, with July seen as the most likely kickoff point. But Fed officials remain cautious, signaling they want more clarity on how tariffs may affect consumer prices and business investment before pivoting toward easing.

Investors now turn to Fed Chair Jerome Powell’s press conference at 2:30 p.m. ET for any forward-looking hints. His remarks could provide key insights into whether the central bank is leaning more hawkish or dovish heading into the summer.