The Federal Reserve Retains 4.5% Interest Rate

The Federal Reserve announced its interest rate decision on June 18, keeping the upper bound at 4.50%, in line with expectations of 4.50% and unchanged from the previous level of 4.50%. According to the June 2025 FOMC meeting, 7 participants projected no rate cuts this year, 2 anticipated one cut, 8 expected two cuts, and 2 projected three cuts. No participant forecast more than three cuts.

It marks the fourth time this year that the Feds have maintained the interest rate between 4.25% and 4.5%. The decision was widely expected given the favorable macroeconomic data, although rising political tensions still linger. But, what does the retained Interest rate mean for crypto? 

Why the Feds Retained Interest Rate

According to the Feds, recent indicators suggest that the economy is expanding at a solid pace, with moderate swings in net exports. Also, the unemployment rate is low, and the labor market is still robust, even though inflation is still on the upside. May’s Consumer Price Index rose to 2.4%, which is still above the 2%. The Feds aim to achieve a 2% flat inflation and unemployment rate in the long run.

Despite predictions of two rate cuts this year, the Fed is taking a cautious approach, especially considering economic uncertainties surrounding shifting tariff policies and rising tensions in the Middle East. For now, the Committee has concluded on maintaining the rate at 4.5%, based on all factors, including current data and emerging policies. However, the Feds will continue to monitor the implications of future economic outlook and decide the appropriate adjustments based on incoming data. 

Impact on the Crypto Market

The market reacted sharply to the news, but only for a brief moment. Bitcoin and major altcoins saw modest gains, as investors expressed optimism at the continued rate hold. BTC climbed to $105k before returning to $104k. Overall, the market saw little movement. 

However, a higher interest rate would have put more pressure on speculative assets, like crypto. Investors will likely take the bait by moving capital into traditional, low-risk financial products like bonds and savings rather than crypto due to strong yields. The effect? Crypto will not only lose some share of investors, but Bitcoin and other major altcoins will experience a price decline. 

What’s Next for Crypto?

Experts are betting on an extra two rate cuts before 2025 ends. If this plays out, investors will move their capital to crypto for better yields and hedge against inflation. Investors still see Bitcoin as a long-term hedge amid economic pressure and will probably diversify their funds into the asset.  

The effect of this movement will potentially spark rallies in the market, especially in the stablecoin niche. Stablecoin issuers, such as Circle, will benefit from the renewed rally, as they could witness increased investor demand and exposure. Still, the Feds are closely watching and will make a move based on the economic outlook. For now, crypto investors and enthusiasts are watching to see how the play unfolds.