Fed Holds US Interest Rates Steady, Bitcoin Barely Reacts as Market Awaits Warsh

The Federal Reserve, the United States' central bank, decided on Wednesday (28) to hold its benchmark interest rate in the 3.75%–4% range, not following through on the increase made in September. The decision had been widely expected by investors and caused little movement in the cryptocurrency market, with Bitcoin staying just below US$ 81,000.

The decision was approved by ten votes to two by the Federal Open Market Committee (FOMC). Lisa Cook, a member of the Fed's Board of Governors, and Beth Hammack, president of the Cleveland regional branch, voted for a 0.25 percentage point increase in rates.

In the crypto market, the initial reaction was muted. Bitcoin briefly rose to the region of US$ 81,000 right after the announcement, but continued showing small fluctuations, without a significant change to its recent trend. Ethereum (ETH) also showed little movement, as did other large cryptocurrencies, including Solana (SOL) and XRP.

The stability reflects the fact that the market had already priced in the rate hold. Ahead of the meeting, futures contracts tracked by CME FedWatch pointed to a probability above 90% that the Fed would not change rates on Wednesday. The market is now waiting for remarks from Fed Chair Kevin Warsh.

In the statement released after the meeting, the US central bank maintained its warning on price developments. "Inflation remains elevated," the Fed said, adding that it will continue assessing economic data to determine the monetary policy needed to bring inflation back to the 2% target.

The monetary authority also noted that US economic activity continues to grow at a strong pace, despite uncertainty stemming partly from geopolitical tensions.

According to the statement, household spending remains resilient, business investment continues to run high, and the labour market shows stability.

The decision comes a little over a month after the Fed raised rates by 0.25 percentage point, its first increase since 2023. At the time, the US central bank had signalled that another increase might be needed later in 2026.

Fed keeps focus on inflation as market expects another hike in December

Wednesday's decision reinforced the perception that the Fed intends to assess the effects of the last increase before raising rates again.

US inflation remains above the central bank's 2% target. In September, the consumer price index (CPI) rose 3.7% over 12 months, driven mainly by energy costs.

The rise in oil prices, linked to tensions in the Middle East, is one of investors' main concerns. The fear is that higher fuel and transport costs will push up other prices across the economy, making it harder to bring inflation under control.

At the same time, the US labour market remains relatively resilient, with unemployment at 4.2%, easing pressure for a looser monetary policy.

Although the Fed did not announce a new rate increase at this meeting, the fact that two committee members voted for a hike shows that part of the monetary authority already considers it necessary to step up the fight against inflation.

Ahead of the decision, investors had been working on the expectation that rates could rise again at the next meeting, scheduled for December.

For Bitcoin, the backdrop matters because higher rates tend to increase the appeal of US government bonds and reduce investors' willingness to take on risk in assets such as equities and cryptocurrencies.

The rate hold, on the other hand, had already been factored into market expectations and therefore did not trigger a more pronounced price reaction.

Traditional markets also showed limited moves after the announcement. The yield on ten-year US Treasury bonds rose to approximately 5.03%, while major US stock indices posted small gains.

Investors' attention now turns to the Fed chair's remarks and to upcoming US economic indicators.

On Thursday (29), new data on US economic activity and inflation will be released, which could help shape expectations for the December meeting.

For the cryptocurrency market, the key question remains how long US rates will stay elevated and whether the central bank will need further increases to bring inflation under control.

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