Fed Holds Rates Steady, But Two Governors Already Want a Hike
Two Fed governors already wanted a rate hike, while the central bank keeps the pause in place. Bitcoin reacted briefly, but the focus is now on PCE inflation and December.
Key Takeaways
- The Federal Reserve left rates unchanged at 3.75% to 4%, but two of the twelve voting members wanted a 0.25 percentage point hike instead.
- Bitcoin briefly touched about $81,185 after the decision and then slipped back to around $80,950, as the market was already expecting a pause.
- Investors are now watching Kevin Warsh's press conference and PCE inflation, which could offer more clarity on a possible December hike.
The Federal Reserve left rates unchanged on Wednesday at 3.75% to 4%, but the decision was not unanimous. Two of the twelve voting members wanted a 0.25 percentage point hike instead. For the crypto market, the key point is that higher rates make borrowing more expensive and can pull money out of riskier investments like stocks and Bitcoin.
Divided Decision in Washington
Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack voted against the decision because they wanted a rate hike. That marked a shift from the previous meeting in September, when rates were raised by 0.25 percentage point and all twelve voters backed the move.
It is also notable that this time the Fed removed a sentence saying policy would help return inflation to 2%. Instead, the central bank said it needs more information to decide the next step. That fits the cautious tone several Fed officials have been using lately, while inflation remains stubborn.
Bitcoin Reacts Briefly
The market had already been expecting a pause. According to futures markets, the odds of a rate hike in December were already around 84% before the decision. After the announcement, Bitcoin briefly touched about $81,185 (€72,900), before slipping back to around $80,950 (€72,700) on Binance.
That reaction shows the rate decision was mainly seen as confirmation of an expectation that was already priced in. Gold also dipped slightly, down 0.1% to about $4,036 (€3,630) per ounce. For crypto traders, the big question remains how long the Fed will wait before making its next move, especially now that inflation came in at 3.7% year over year in September.
What Investors Are Watching Now
Later on Wednesday, Fed Chair Kevin Warsh will hold a press conference. On Thursday, PCE inflation follows, the Fed's favorite inflation gauge. Those numbers could help show whether the central bank sees room for another hike in December, although there is still no certainty about that yet.
For European crypto investors, this matters because US rates often spill over into the broader risk market. If the Fed keeps policy tight for longer, that could set the tone for Bitcoin and other crypto heading into the next policy meeting.
