We break down the Fed’s latest rate decision — and how it affected digital assets and broader financial markets.
The Federal Reserve held its key rate at 3.5-3.75% for the sixth consecutive meeting. The decision passed nine votes to three–Beth Hammack, Neel Kashkari, and Lori Logan dissented, calling for a 25-basis-point hike. That’s the sharpest FOMC split since September 2016, CNBC reports.
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Crypto markets barely moved on the news. Bitcoin (BTC) continues to trade near $64,000, down 0.5% on the day. The S&P 500 fell roughly 1.5%, the Nasdaq 1.7%, and the Dow Jones 2.19%. For the S&P 500, it was the worst-ever performance on a second “Fed day” under a new chair in modern history.
Contents
Sharp FOMC Split: Why Three Voted for a Hike and What It Means
The dissenting votes came from the Cleveland, Minneapolis, and Dallas Fed presidents. In its statement, the Fed tied inflation–running above its 2% target for more than five years–to supply shocks, including energy. Economic activity was described as “expanding at a solid pace,” despite elevated uncertainty from the Middle East conflict.
At his press conference, Fed Chair Kevin Warsh declined to call the decision a pause, instead calling it a “rigorous reassessment of the economic situation.” He rejected the notion that the Fed’s effective target is higher than its stated one–there is no soft inflation target, only 2%. Five years of elevated prices, he said, won’t be “cured in nine weeks or by one month of moderate slowing.” Warsh also noted that Treasury yields have risen sharply over the 42 days since the last meeting.
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Why Crypto Didn’t React — but Stocks Fell
Digital assets stayed range-bound. Total market cap rose 0.2% to $2.2T over 24 hours. Bitcoin lost less than 1%. Ethereum (ETH) fell 1% and trades at approximately $1,900. BNB rose 0.6% to $574. XRP fell 1% and trades at $1.08. Solana (SOL) fell 0.8% to $73.37.
21Shares Head Macro Strategist Steven Coltman called the decision a “relief” for investors but warned it could complicate the September meeting if inflation remains high. Sygnum Bank investment strategist Kaan-Luca Koymen noted the Fed wants to keep its options open.
Equity markets reacted differently. The S&P 500 lost about 1.5%, the Nasdaq 1.7%, and the Dow 2.19%. Bespoke Investment Group noted it was the worst reaction to a second meeting under a new Fed chair on record.
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Economists Split on Outlook
Nationwide Chief Economist Kathy Bostjancic said holding rates is justified through year-end, since inflation is driven by supply factors that a hike wouldn’t address. Jeffrey Gundlach of DoubleLine Capital, however, argued that inflation’s origin doesn’t absolve the Fed from its 2% target, and that a hike will be needed.
Investors now see a 65% chance of a 25-basis-point hike. Polymarket puts the odds at 54%, Kalshi at 53%.
NISA Investment Advisors Chief Economist Steven Douglass remains one of the few expecting a cut–calling July’s decision a “hawkish hold” and forecasting a March 2027 cut. Morgan Stanley Investment Management CIO Jim Caron offered an alternative view: the rate debate may be losing relevance, as tightening is already happening through rising Treasury yields, and post-meeting dips can be seen as buying opportunities.
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