Fed rate cut hopes dim as Powell’s stance sees September odds fall to 40%

Federal Reserve Chair Jerome Powell dashed hopes for a September Fed rate cut during Wednesday’s press conference, maintaining benchmark interest rates at 5.25%-5.5% — their highest level in over two decades.

The decision, driven by stubborn inflation (now at 2.7%) and trade war risks, sent the probability of a September Fed rate cut tumbling from 63% to 40%, according to CME FedWatch data.

“We’ve made no decisions about September. We don’t do that in advance,” Powell stated, emphasizing a data-dependent approach.

The ambiguity rippled through crypto markets, with Bitcoin briefly dipping before recovering during Asian trading hours.

Why the Fed rate cut delay matters for crypto

Historically, crypto markets thrive when the Fed cuts rates, as lower yields push investors toward riskier assets. But with Powell citing “elevated” economic uncertainty and rising tariffs inflating consumer prices, analysts now foresee a tempered bull run.

“If unemployment holds steady and tariffs push inflation up, justifying a Fed rate cut soon will be tough,” said Bill Adams, Comerica Bank’s chief economist, to Reuters. Crypto trader Nick Ruck of LVRG Research told Cointelegraph: “A cautious Fed may slow the bull market’s pace, but liquidity could keep a floor under prices.”

Dissenting voices and market reactions

The Fed’s vote revealed rare internal conflict, with two officials — Governors Christopher Waller and Michelle Bowman — advocating for an immediate 0.25% Fed rate cut.

This was the first dual dissent in 30 years, signaling growing pressure to ease policy.

Despite the hold, markets still price in one to two Fed rate cuts by year-end. “This won’t materially impact crypto,” argued Apollo Capital CIO Henrik Andersson, noting traders had anticipated delays.

Total crypto market capitalization held steady at $3.94 trillion, remaining range-bound for weeks.

Key points

• The Fed rate cut probability for September dropped to 40% post-meeting.

• Powell cited tariffs and inflation as hurdles to near-term easing.

• Crypto markets showed resilience, but analysts warn of slower momentum.

• Two Fed governors broke ranks, urging immediate rate cuts.