The Federal Reserve left interest rates at 3.50%-3.75% on July 29, but three FOMC members broke ranks and voted for an immediate increase. Chair Kevin Warsh declined to rule out another hike in September, and Bitcoin barely moved, holding near $64,000.
Bitcoin traded near $64,000 after the US Federal Reserve left interest rates unchanged at 3.50%-3.75% on July 29, a decision that largely matched market expectations. Policymakers sounded more hawkish than the headline decision suggested, because three FOMC members voted for an immediate rate increase.
Three Fed officials break ranks
The FOMC voted 9-3 to keep interest rates unchanged. Beth Hammack, Neel Kashkari and Lorie Logan dissented in favour of raising the federal funds rate to 3.75%-4.00%, a notable shift from June, when all 12 voting members supported leaving policy unchanged.
Alongside the vote, the statement described economic activity as continuing to expand at a solid pace, with labour market conditions remaining stable. Officials also said inflation remains above the Fed's 2% target, citing persistent price pressures partly reinforced by energy-related supply disruptions.
Warsh keeps September on the table
Warsh rejected suggestions that July marked a routine pause, describing the meeting as an active assessment of the Fed's policy options rather than the start of an easing cycle. He downplayed June's softer inflation reading, saying it influenced policymakers "not much" as they continue to focus on broader inflation trends.
Yet Warsh stopped short of signalling a September increase, acknowledging only that higher interest rates could still become necessary if inflation fails to moderate. He pointed to higher nominal and inflation-adjusted Treasury yields as evidence that financial conditions had already tightened between meetings despite no change in the policy rate.
Attention now shifts to the Fed's Jackson Hole Symposium in August, where Warsh indicated he could provide further guidance on the economic outlook ahead of the September meeting.
Bitcoin's reaction stays subdued
Bitcoin traded around $63,850 following the decision, after fluctuating between roughly $63,516 and $64,640 during the session. The muted reaction suggests investors had already priced in both the rate hold and a cautious stance on inflation.
Even so, the meeting did little to improve the near-term outlook for risk assets. If incoming inflation and employment data continue to support the Fed's hawkish stance, expectations for a September rate increase could strengthen. That would likely keep pressure on Treasury yields and the US dollar upward while limiting the liquidity conditions that have historically supported Bitcoin and the broader crypto market.
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