Fed Holds Rates Steady at 4.25–4.5% As Trump Blasts Powell

The US Federal Reserve voted on 18 June 2025 to keep interest rates unchanged at 4.25% to 4.5%, marking the fifth straight meeting without a cut. The crypto market saw a slight dip in response to the rate announcement, as traders became more cautious.

Fed Chair Jerome Powell also noted that while Trump tariffs are not yet driving inflation, their impact could grow in the second half of the year.

Fed maintains current rate

Fed Reserve Chair Jerome Powell stated in his press conference that while inflation has eased from its peak, it’s still above the 2% target, and the central bank needs “greater confidence” before lowering rates.

The Fed’s statement noted continued growth in the economy and a strong labor market, but inflation remains “somewhat elevated.” Powell emphasized that any future cuts would be “data-dependent” and that it was still too early to declare victory over inflation.

The accompanying implementation note confirmed that the Fed would maintain the interest rate paid on reserve balances at 4.4%, effective 20 June. 

The central bank also plans to continue reducing its balance sheet, capping monthly Treasury redemptions at $5billion and agency Mortgage Backed Securities (MBS) at $35bn. Overnight repurchase agreement operations will continue with limits of up to $500bn, providing liquidity as needed.

Fed watches for inflation from tariffs

Powell addressed the effect of the Trump administration’s new tariffs during his post-meeting remarks, noting that while they haven’t significantly influenced the current inflation picture, the Fed remains alert to their potential impact.

“We are monitoring the potential inflationary effects of the new tariffs closely. At this point, they don’t appear to be a significant factor in the current inflation data, but they could influence prices in the second half of the year,” Powell said.

He added that the goods inflation seen so far remains modest, but incoming data over the summer will be key in assessing whether the tariffs feed into broader price pressures.

Crypto market pulls back

Traders had hoped for a more dovish tone or clearer signals of a rate cut, but Powell offered none.

Bitcoin slipped by 1.2% to trade just above $104,000, while Ethereum dropped 2.1% to around $2,520. Altcoins saw sharper losses, with high-volatility assets like Solana, AVAX, and PEPE each dropping over 3% post-announcement.

The total crypto market cap briefly dipped below $3.34trillion after the FOMC statement but recovered slightly to around $3.37trn on 19 June. 24-hour trading volume stood at roughly $100.9bn, reflecting moderate activity amid policy uncertainty.

What it means for crypto

Higher interest rates generally weigh on risk assets, including crypto. With the Fed showing no rush to cut, traders may rotate into safer assets or remain on the sidelines.

The uncertainty around when the first cut will come continues to cloud short-term market sentiment.

Trump blasts Powell’s leadership

Ahead of the Fed announcement yesterday, US president Donald Trump criticized Powell from the White House and called him “a stupid person” while blaming him for costing the country “hundreds of billions” in extra interest payments.

Trump argued that rates should be 2 to 2.5 percentage points lower, pointing to Europe’s multiple cuts in contrast to the US Fed’s inaction.

In another post on Truth Social, he also referred to the Fed Chair as a “real dummy”, insisting he’s costing Americans billions.

Looking ahead

The Fed’s next meeting is scheduled for late July. Until then, crypto markets may continue to trade with caution, especially as rate-sensitive macro data like inflation, jobs, and GDP roll in. For now, the Fed is holding firm — and so are traders’ nerves.