FOMC Meeting: Fed Keeps Interest Rates Steady Amid Inflation Risks

FOMC Decision: Fed Rate Hold Spark Positive Movement in Crypto Market

The FOMC meeting held on 6-7 May had the following highlights. The US Federal Reserve has once again kept interest rates steady, holding them between 4.25% and 4.50%. This is the third time in a row that the Fed has decided not to make any changes. 

Fed Chair Jerome Powell said that inflation is still too high and the economy is showing signs of slowing down. 

He added that the Fed is being cautious and wants to make sure that condition is under control before making any moves. While it has slightly improved, Powell said it’s not low enough yet to begin cutting rates.

Powell: Too Soon to Cut Interest Rates

Jerome Powell made it clear that it is too early to lower rates. He said during the FOMC meeting that, the Fed needs stronger proof that the rate inflating is falling in a steady and lasting way. He explained that if the Fed cuts rates too soon, there is a risk that inflation could rise again. That would make things worse. 

He also said during the FOMC meeting that while some of the data related to the economic condition looks better, the numbers are still mixed. The Fed wants to wait until it sees more clear signs that inflation is going down for good.

Tariffs and Inflation Still a Problem

New US tariffs on Chinese imports are making things even tougher. These trade restrictions may drive the cost of imported items up, and that might lead to greater inflation. Powell conceded that the Fed's task becomes more challenging when trade tensions increase. In March 2025, prices even dipped by 0.1%, but core inflation, excluding food and energy, again increased stated in the FOMC meeting. 

Car prices also rose in April as individuals attempted to purchase before fresh tariffs began. The US economy contracted 0.3% in the first quarter, an indication that growth is slowing down. Although, the job market is acting good, with 177,000 jobs added in the month of April.

How the Crypto Market Reacted

The market has experienced an increase of 2.80%, the crypto market cap is at $3.07 Trillion. Bitcoin, Ethereum, XRP, and Solana, all have increased by 2.69%, 4.04%, 2.35%, and 3.43% respectively, as per the reports of CoinMarketCap. 

The crypto market responded positively to the after the FOMC meeting and Federal Reserve's decision to keep interest rates unchanged. Investors saw this as a sign of stability, boosting confidence across digital assets. Many investors are now seeing crypto as a valuable option in uncertain economic times, with digital assets showing resilience and potential for growth despite global financial concerns.