Markets reels after Fed says economy is 'in solid position'

Yahoo

07-05-2025

Bitcoin has been trading at $96,532.37 after The Federal Reserve decided to hold rates unchanged at 4.25% to 4.50% for the current policy statement.
Crypto markets held steady Wednesday after the Federal Reserve left interest rates unchanged and made a surprise decision to halt the reduction of its balance sheet, a shift seen as slightly more accommodative in tone.
The decision came after Chairman Jerome Powell reiterated consistent communication, emphasizing that the Fed retains a data-dependent approach in the face of continuing inflation and a labor market that is moderating but remains strong.
'The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective,' the Fed said in its post-meeting statement. Powell also added that the U.S. economy "is in a solid position".
It also recognized additional "uncertainty around the economic outlook' has increased, likely due to U.S. tariff escalation with China.
Minutes before the Fed's decision hit the market, Trump stated he wouldn't roll back the 145% tariffs on Chinese goods, raising significant apprehension among global markets.
While the Fed certainly didn't execute the rate cut that the President wanted, it did surprise markets by saying it would halt the pace of its program to reduce the balance sheet. The Fed will slow down the process of pulling money out of the economy, which will benefit markets like crypto assets.
What the Fed will do next will depend quite a bit on inflation data and upcoming soft data related to the job market, which will help decide if rate cuts happen later this year — potentially a significant catalyst for momentum in digital assets.