The Federal Reserve kept its benchmark fed funds rate range unchanged at 3.50%-3.75% for the fifth consecutive meeting on July 29, extending its pause as policymakers continue to grapple with stubborn inflation. According to The Times of India, the US Federal Reserve announced the monetary policy review after deliberations on July 28 and July 29, with the Committee deciding to maintain the target range for the federal funds rate at 3-1/2 to 3-3/4 percent, in support of the Federal Reserve's dual mandate. For the first time in several years, markets were somewhat split on whether the U.S. central bank would hike rates, with this decision coming after one of the most uncertain pre-meeting setups in years. Investors see a 71% chance that the Fed will keep rates unchanged and a 29% chance rates will be hiked 25 basis points, according to the CME Group's FedWatch tool, representing the highest amount of uncertainty over the Fed's interest rate decision since 2024. The decision came after a two-day meeting and was followed by a press conference by Fed Chair Kevin Warsh, his second policy meeting since taking charge of the central bank.
Bitcoin rose to around $64,400 on Thursday morning after the Fed's decision, showing resilience despite facing pressure from geopolitical tensions and a stronger dollar. According to Mint, Bitcoin traded higher on Thursday, after the US Federal Reserve kept interest rates unchanged but delivered a more hawkish-than-expected policy outcome, prompting investors to reassess the outlook for risk assets. The US dollar and benchmark 10-year Treasury yields strengthened following the Federal Reserve's policy decision, with Bitcoin trading at around $64,400 on the morning of July 30. Bitcoin was trading at around $64,400 on the morning of July 30 after the US dollar and benchmark 10-year Treasury yields strengthened following the Federal Reserve's policy decision. Bitcoin traded at $64,062, up 0.26% in 24 hours, as reported by The Economic Times, while Ethereum slipped 0.07% to $1,905. Bitcoin was trading near the $64,000 mark on Thursday after the US Federal Reserve kept interest rates unchanged at 3.50%-3.75%, while futures open interest climbed to a two-month high, signalling higher leveraged activity. The meeting did little to improve the near-term outlook for risk assets, with Bitcoin's subdued performance reflecting the market's cautious approach to the Fed's hawkish stance.
The Fed's decision came with an unexpectedly hawkish twist, as three officials dissented in favor of a 25-basis-point rate hike, producing a 9-3 vote that marked far more division than markets anticipated. Beth Hammack (Cleveland Fed), Neel Kashkari (Minneapolis Fed) and Lorrie Logan (Dallas Fed) dissented, favoring a surprise increase that would have marked one of the biggest policy surprises in decades. According to Goldman Sachs, a surprise increase was viewed as the largest non-rate-cut shock since the Fed began issuing policy statements. Heading into the decision, CME FedWatch assigned roughly a 70.6% probability to a hold, while Kalshi traders priced a 77% chance of unchanged rates, showing how close the decision was to going the other way. The FOMC reiterated that economic activity continues expanding at a solid pace despite elevated uncertainty tied partly to the Middle East conflict, while highlighting strong productivity growth, strong capital investment, steady job gains, and an unemployment rate that has changed little. The dissenters pitched for raising "target range for the federal funds rate by 1/4 percentage point", as stated in the official meeting statement. Notably, the same three policymakers — the presidents of the Cleveland, Dallas and Minneapolis Federal Reserve banks — had also dissented at Jerome Powell's final meeting as Fed chair in late April, when they favoured removing the implied promise of lower interest rates.
Fed Chair Kevin Warsh has signaled that the next rate decision will likely come on September 16, with 48 days remaining before the next meeting. According to Investing.com, Warsh stated "Unless we see some very good inflation data in the next 48 days the Fed is going to hike rates", indicating growing impatience with current inflation levels. Warsh added "I expect a hike unless there is a labor market collapse", suggesting the Fed is prepared to act unless economic conditions deteriorate significantly. During his press conference, Warsh rejected suggestions that July represented a routine pause, describing the meeting as an active assessment of the Fed's policy options rather than the start of an easing cycle. He also downplayed the significance of June's softer inflation reading, saying it influenced policymakers "not much" as they continue to focus on broader inflation trends. Warsh acknowledged that higher interest rates could still become necessary if inflation fails to moderate, while noting that financial conditions had already tightened between meetings, pointing to higher nominal and inflation-adjusted Treasury yields despite no change in the policy rate. Attention now shifts to the Fed's Jackson Hole Symposium in August, where Warsh indicated he could provide further guidance on the economic outlook ahead of the September meeting.
Bitcoin held near $64,000 through the Fed decision, even as stocks slid and Treasury yields rose, showing remarkable resilience despite the hawkish tone. According to CoinDesk, four analysts agree the Fed's hawkish hold changes the calculus for risk assets, but they split on whether bitcoin's real test is already here or still six weeks away. Andrei Grachev, managing partner at DWF Labs, is worried about what Wednesday's hold, delivered with a hawkish tone, signals about the Fed's tolerance for pain. "This is the Fed telling markets it will not tolerate inflation above target even at the cost of a growth scare," Grachev said. "For digital assets, that's the least favorable outcome on the table this cycle." His reasoning centers on "tighter policy, less liquidity, [means] more expensive carry" - tighter liquidity makes leveraged and carry-funded crypto positions more expensive to hold, which can pressure bitcoin's price. Can-Luca Köymen, investment strategist at Sygnum Bank, took a nearly opposite view, largely because he'd already priced in the hawkish hold. "This was broadly the outcome we expected," he said. "Our base case was a hold, and hawkish language accompanying it is consistent with a committee that wants to preserve optionality while the energy picture remains unsettled." Bitcoin needs to reclaim $64,000 to improve momentum, while a drop below $63,300 could trigger fresh selling, according to The Economic Times. Avinash Shekhar, Co-Founder and CEO of Pi42, said growing institutional participation, sustained inflows into spot ETFs, and Bitcoin's fixed supply continue to reinforce confidence in its long-term outlook, while Akshat Siddhant from Mudrex noted that US spot Bitcoin ETFs recorded a fourth consecutive day of net outflows, taking cumulative withdrawals to $526 million.
Geopolitical developments added to investor caution, with the US military launching fresh strikes on Iran on Wednesday (local time), its first attacks since July 24, in retaliation for an Iranian missile strike on a US base in Jordan a day earlier. According to Mint, the renewed conflict pushed crude oil prices back toward $90 a barrel, intensifying concerns over inflation and reinforcing expectations that higher interest rates could persist for longer. Oil prices surged, with WTI crude rising 7.6% and Brent crude gaining 5.4%, increasing the risk of higher consumer inflation and influencing expectations around future interest rate decisions. The problem is not simply whether higher oil prices lift headline inflation for several months, but whether renewed energy pressure arrives alongside tariffs, resilient nominal demand and strong capital investment, then begins filtering into freight costs, goods prices, wages and inflation expectations. With nine policymakers having previously projected higher rates this year, the possibility of further tightening was already embedded inside the committee even before the three dissents made it explicit. In fixed income, we have seen some bullish steepening of the curve, 8bp off the short-end and only 2bp off the long end, with break-even inflation rates from the 5Y5Y inflation swap nudging 4bp higher and gold and silver seeing 2-3% rallies on expectations that the Fed may not back up its inflation-fighting rhetoric with action.
