The regulator kept the key rate at 3.5–3.75% per annum. Despite expectations from the crypto sector, the head of the agency did not rule out the possibility of a rate hike before the end of the year, according to forklog.com.
The dot plot revealed a split in opinion: nine officials expect the rate to remain unchanged or be lowered, while another nine anticipate at least one hike. Warsh himself declined to offer a personal assessment, calling this format “restrictive” for future policy.
The Fed chair announced the creation of five working groups. They will examine the regulator’s communications, its balance sheet, data sources, the impact of AI on the economy, and methods for combating inflation.
During the press conference, Warsh mentioned “price stability” more than ten times. Investors interpreted his rhetoric as “hawkish.” Against this backdrop, the yield on two-year U.S. Treasury bonds rose by 14.4 basis points, while stock indices fell.
The Fed identified surging energy prices due to the conflict in the Middle East as the main risk to the economy. Kevin Warsh emphasized that the Fed intends to bring inflation back to its 2% target, calling this commitment “unconditional.”
Market Reaction
Bitcoin prices fell to ~$63,680. Ethereum lost 3.15%, while Solana and XRP dropped 2.9% and 3.8%, respectively. Only TRX posted a 0.75% gain.
The GMCI 30 Index, which tracks the largest assets by market capitalization, lost 2.6%.
The price of gold fell by 1.39%, while silver dropped by 2.79%.
The stock market reacted differently to the news. The S&P 500 and Nasdaq indices rose following the signing of an interim agreement with Iran and the reopening of the Strait of Hormuz.
