Fed Expected to Halt Rate Cuts, Crypto Markets Watch Closely

The Federal Reserve is widely expected to pause its interest rate cuts at today's Federal Open Market Committee (FOMC) meeting, a move that defies sustained pressure from President Trump.

Led by Chair Jerome Powell, the central bank's decision to hold rates steady could have significant ripple effects across financial markets. For assets like Bitcoin (BTC) and Ethereum (ETH), which are highly sensitive to shifts in U.S. monetary policy, the outcome of the 2 p.m. ET meeting is a critical focal point. Powell's stance is seen as an effort to maintain the Fed's independence and promote economic stability.

Market Prices In a Rate Hold with 97% Certainty

Financial markets are signaling near-unanimous conviction that the Fed will not cut rates. Current pricing reflects a 97.2% probability that the central bank will keep its policy rate unchanged.

This consensus holds firm despite the visible tension between the Trump administration and the Federal Reserve. Investors appear confident that the institution will prioritize its mandate over political influence.

Benjamin Shoesmith, an economist at KPMG, highlighted this sentiment, stating, "Financial markets have not changed their pricing for rate cuts, despite an escalation of tension between the administration and Fed Chairman Jay Powell. Investors are betting the Fed keeps its independence from political influence."

How a Fed Pause Could Impact Bitcoin and Ethereum

The Federal Reserve's decisions on interest rates directly influence liquidity and borrowing costs across the economy. These changes often impact investor behavior toward higher-risk assets.

Historically, the market performance of cryptocurrencies like Bitcoin and Ethereum has been correlated with U.S. monetary policy. A pause in rate cuts could therefore alter trading dynamics and liquidity conditions for these digital assets.

After 2025 Cuts, What's the Outlook for 2026?

Today's anticipated pause follows three consecutive rate reductions implemented by the Fed in 2025. This period of easing was set against a backdrop reminiscent of the high-inflation environment of 2022, underscoring the central bank's independent approach to managing the economy.

Looking ahead, market experts do not foresee an immediate return to rate cuts. According to Gregory Daco, Chief Economist at EY-Parthenon, any further easing is likely months away.

"We anticipate 50 basis points of easing through 2026," Daco noted, adding that "the first 2026 rate cut is unlikely to occur before June."