Bitcoin hovered near $89,000 on Wednesday as the Federal Reserve opted to keep interest rates steady, pausing its rate-cutting cycle and striking a notably calmer tone on inflation and the labor market.
Bitcoin price traded above $90,000 earlier in the session before falling to around $89,500 as Federal Reserve Chairman Jerome Powell spoke at his post-meeting press conference.
The move came after the Fed announced it would keep its benchmark interest rate unchanged in a range of 3.5% to 3.75%, ending a string of three consecutive 25-basis-point cuts delivered in September, October and December.
The decision reflected a central bank growing increasingly comfortable with the economy’s trajectory, even as inflation remains above target. Policymakers cited moderate job growth and persistent price pressures as reasons to halt further easing.
The Federal Open Market Committee voted 10-2 to hold rates, with Governors Stephen Miran and Christopher Waller dissenting in favor of another quarter-point cut.
Miran, whose term expires Saturday, has consistently argued for deeper rate cuts. Waller, meanwhile, is one of the potential candidates to succeed Powell as Fed chairman and last dissented in July when the Fed also kept interest rates steady.
Fed’s Powell: The economy is expanding at a solid pace
In its statement, the FOMC said the economy continues to expand “at a solid pace,” noting that job growth “has remained low” while the unemployment rate has shown “some signs of stabilization.” Inflation, the committee added, “remains somewhat elevated.”
Powell reinforced that message, stressing that after cutting interest rates by a cumulative 175 basis points over the past year, the Fed now views policy as close to neutral.
“It’s hard to look at the incoming data and say the policy is significantly restrictive at this point,” Powell said, describing the current stance as “loosely neutral or somewhat restrictive — it’s in the eye of the beholder.”
That framing had an impact on the markets. Bitcoin has historically responded positively to easing financial conditions, but Wednesday’s price action suggested traders were prepared for this FOMC decision and recalibrated expectations for near-term interest rate cuts rather than reacting to outright hawkishness.
Powell struck a measured tone on the labor market, pushing back against fears of a sharp deterioration. He noted that recent payrolls reports showed average job losses of about 22,000 a month, while private sector hiring remained modestly positive.
Slower labor supply growth, he said, reflected reduced immigration and participation rather than collapsing demand.
On inflation, Powell pointed to tariffs as a major driver of increased commodity prices, calling them a largely “one-time effect” rather than a source of sustained inflation.
Core consumer spending inflation stood at 2.9% year over year through December, still above the Fed’s 2% target.
“The expectation is that we will see the effects of tariffs flowing through commodity prices peak and then start to decline,” Powell said, ruling out new trade actions.
For bitcoin traders, Powell’s comments reinforced a familiar narrative: The Fed is no longer tightening aggressively, but it’s also in no rush to deliver additional stimulus. This middle ground has supported bitcoin’s ability to hold on to recent gains while limiting near-term upside tied to hopes of quick rate cuts.
Who will be the next Fed chair?
The question of succession also came up during the meeting. Asked what advice he would give his eventual successor, Powell delivered a pointed, three-pronged answer: stay out of politics, stay engaged in Congress and respect the institution’s staff.
“Stay out of elected policy. Don’t do that,” Powell said, stressing the Fed’s need to maintain independence at a time when its authority is facing increased scrutiny, including an ongoing Supreme Court case involving the central bank.
Waller’s dissent and Miran’s departure have fueled speculation about the Fed’s future leadership and policy direction, a factor increasingly watched by crypto markets sensitive to changes in monetary philosophy.
Trump’s pick for the Federal Reserve chair could be announced within a week or two, Treasury Secretary Scott Bessent said, according to Yahoo Finance.
At Polymarket, Rick Rieder leads the bet to be the next Fed chair at about 37%, followed by Kevin Warsh at about 28%, with Christopher Waller a distant third at close to 15%.