Traders Await Fed Rate Decision as Chair Powell Resists Pressure to Quit

Traders are on high alert for the rate decision at 18:00 UTC and any clues about the central bank’s monetary policy outlook that emerge from the press conference half an hour later.

4.25%-4.50% Range

The Fed’s Federal Open Market Committee (FOMC), which conducts eight scheduled meetings a year, is widely expected to maintain its key rate in the range of 4.25%-4.50% where it has remained since December. According to the CME FedWatch tool, the probability of the central bank holding rates steady is a staggering 97.9%, despite the White House clamouring for a cut.

President Trump and some of his senior officials have advocated for lower rates as a mechanism to help stimulate the economy and weaken the dollar in denial of the higher domestic inflation that's resulting from Trump’s tariff hikes. American companies have been warning of higher prices and lower earnings as their imports become more expensive as a result of Trump’s new trade levies. US inflation increasing for the second consecutive month in June, according to government data.

GDP growth

The world's largest economy grew faster-than-expected in the second quarter, propelled by an uptick in consumer spending. US GDP growth was 3% (annualized and adjusted for inflation) after shrinkage of 0.5% in the previous period, according to a preliminary set of government figures. That prompted Trump to reiterate his call for the Fed to the act less than three hours before the decision was due: "NOW LOWER THE RATE," he posted in all-caps on his own social media platform. 

“Dovish” momentum

Should the committee find reason to cut rates unexpectedly then a rally in crypto and risk assets may follow. Even a set of “dovish” comments could propel Bitcoin (BTC) and other cryptocurrencies higher, with investors on tenterhooks for any hint of the timing of a much-anticipated future cut later in 2025.

Crypto assets have advanced this year, fueled by new all-time highs for Bitcoin and a resurgence for altcoins early in the third quarter. The CoinMarketCap 100 Index has posted gains of 20%, surpassing April’s trough that occurred amid a global financial market selloff triggered by Trump’s tariff announcements. 

Any dissenters?

Coins would likely thrive in looser monetary conditions and may be influenced by any of the Fed governors breaking ranks and voting against the Chair’s “wait and see” approach to maintaining rates. Potential dissenters – governors Christopher Waller and Michelle Bowman – have voiced their support for cutting rates, in the same vein as Trump (who appointed them both).

Conversely, a rate hold accompanied by hawkish comments could trigger profit-taking and risk aversion. 

Bitcoin was trading at $118,606 at 15:02 UTC, up 0.6% on the previous day, while Ether (ETH) had posted a 0.4% gain. European equities were little changed.

Digital Assets Working Group

The White House is also expected to release its Digital Assets Working Group 180-day report on Wednesday, which may contain clues as to how supportive the government will be to the development crypto in the US, including the creation of a digital stockpile and Bitcoin Strategic Reserve.