Fed Leaves Rates Unchanged, Warns of Increased Economic Uncertainty

Fed Maintains Rates, Cuts Growth Forecasts as Bitcoin and Gold React to Economic Uncertainty

  • Federal Reserve maintains interest rates at 4.25%-4.50% range while lowering economic growth forecasts for 2025-2027.
  • The Fed expressed concerns about economic uncertainty and will slow its balance sheet reduction beginning April 1.
  • Bitcoin reacted with volatility post-announcement, trading at $83,500 while Gold remains near record highs of $3,048 per ounce.

The U.S. Federal Reserve has maintained its benchmark fed funds rate at 4.25%-4.50% on Wednesday, marking the second consecutive pause following three sequential rate cuts that concluded 2024. This decision comes amid rising uncertainty in economic projections and inflation concerns.

- Advertisement -

In its quarterly economic projections, the Fed significantly reduced growth expectations, forecasting a 2025 GDP increase of just 1.7%, down from December’s 2.1% outlook. Growth projections for 2026 and 2027 were similarly trimmed downward.

“Uncertainty around the economic outlook has increased,” noted the Fed in its accompanying statement, likely referencing the potential economic impact of President Trump’s threatened tariff regime.

The inflation outlook has deteriorated, with core PCE inflation now projected at 2.8% this year, up from the previous 2.5% forecast. However, the Fed maintained its longer-term inflation expectations, keeping 2026 and 2027 projections steady at 2.2% and 2.0%, respectively.

Despite these adjustments, the Fed’s “dot plot” continues to project the fed funds rate ending 2024 at 3.9%, unchanged from December’s forecast. The projections for 2026 and 2027 remain at 3.4% and 3.1%, respectively.

A significant policy shift announced was the slowing of quantitative tightening. Beginning April 1, the Fed will reduce Treasury security runoff from its balance sheet to just $5 billion monthly, a substantial decrease from the current $25 billion pace.

Bitcoin showed immediate volatility following the announcement, trading down to $83,500 from over $84,000 pre-release. Meanwhile, U.S. equities maintained solid gains and the 10-year Treasury yield decreased slightly to 4.28%.

- Advertisement -

Gold continues its impressive performance, trading near historic highs at $3,048 per ounce, highlighting investor preference for traditional safe havens amid economic uncertainty.

Risk assets have experienced downward pressure in recent weeks as President Trump’s tariff threats raised concerns about potential inflation impacts and economic slowdown. Additionally, the Fed’s hawkish stance during December and January meetings dampened hopes for near-term financial condition improvements, creating headwinds for cryptocurrencies and equities markets.

Market participants will be closely monitoring Fed Chair Jerome Powell’s press conference scheduled for 2:30 p.m. Eastern Time (18:30 UTC) for additional insights into the central bank’s monetary policy outlook.

- Advertisement -

✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.

Previous Articles:

- Advertisement -

Latest News

Coinbase to Launch US-Regulated Bitcoin, Ether Perpetual Futures

Coinbase will launch U.S.-regulated perpetual-style futures for Bitcoin and Ether on July 21.The move...

Fannie Mae, Freddie Mac Now Accept Crypto Assets for Mortgages

Fannie Mae and Freddie Mac will now recognize Bitcoin and other cryptocurrencies as reserves...

AI-Powered Blockchain Activity Soars 86%, Nears Gaming Market Share

Blockchain-based Artificial Intelligence activity has grown by 86% since the beginning of 2025, according...

Maine Attorney General Recovers Thousands in Crypto Scam Case

The Maine Attorney General's Office has recovered thousands of dollars for a victim of...

Coinbase Shares Hit Highest Level Since 2021 Nasdaq Debut

Coinbase stock reached its highest price since its 2021 listing, nearly returning to debut...

Must Read

7 Best NFT Marketplaces for Every Need

Open Sea | Pianity | Foundation | Magic Eden | SuperRare | Rarible | Theta Drop | Other Platforms | About NFTs | FAQ...