Fed Keeps Interest Rates Steady in First 2025 Policy Decision; Bitcoin Reacts

Today, the US Federal Open Market Committee (FOMC) has finally announced its first monetary policy decision of 2025. In a press release, the Federal Reserve announced that it will keep interest rates steady at the 4.25% to 4.5% range, which is in line with expectations.

Federal Reserve Chair Jerome Powell said the current policy is appropriate given progress in controlling inflation and keeping unemployment low. However, he stressed that inflation remains a concern, noting that the Fed’s latest statement no longer mentions “progress” but instead describes inflation as “somewhat elevated.”

The Fed acknowledged that unemployment has remained low in recent months, which supports its goal of maximum employment. However, the statement also highlighted uncertainty in the economic outlook and the risks to both inflation and job growth.

Bitcoin Dips, Then Rallies

The Fed’s decision could have a bearish effect on riskier assets like cryptocurrencies. Bitcoin (BTC) initially dropped to $101,800 after the news but quickly rebounded to $103,800, its highest level since Sunday. The market’s reaction suggests investors are closely watching the Fed’s stance on interest rates.

Fed’s Approach May Clash with Trump’s Policies

While the Fed remains cautious, President Donald Trump’s economic policies could complicate future decisions. The central bank began cutting interest rates in late 2024, making three 50-basis-point cuts in September, November, and December.

However, Trump’s tax cuts may boost economic growth, while his trade tariffs and immigration policies could push inflation higher. This could slow down future rate cuts, especially with inflation still elevated and the economy performing well.

Key Event Ahead: Inflation Data Release on February 12

Markets are now focused on the next major economic update—January’s inflation report, set for release on February 12 at 8:30 AM ET. Investors, particularly those watching AI companies like DeepSeek challenge Nvidia, will analyze how inflation trends could impact future Fed decisions.

Interest rates, inflation, and AI-driven market trends will remain key themes in the months ahead.