On May 7, 2025, the Federal Reserve maintained interest rates at 4.25%-4.5%, disregarding President Trump's calls for cuts. This decision is due to inflation risks related to tariff policies.
Fed Holds Rates Steady
The Federal Open Market Committee (FOMC) kept interest rates unchanged for the third consecutive meeting on May 7, 2025. This decision met market expectations, with a 98% probability priced in. The Fed's statement highlighted elevated uncertainty regarding trade policy impacts on inflation.
Trump’s Tariffs and Economic Impact
The tariffs introduced by President Trump since April target steel, aluminum, and autos, enforcing a 25% duty on imports. These measures are expected to increase federal revenues by $163.1 billion in 2025 but could reduce GDP by 8% and wages by 7%. Job growth in April slowed modestly, with 177,000 new positions added.
Market Projections and Fed Expectations
Rate cuts are anticipated starting in July 2025, with two to three reductions by year-end. Investors are advised to keep an eye on trade talks and inflation data to gauge Bitcoin's trajectory. The Fed emphasizes its independence and commitment to inflation control despite political pressures.
The Fed's decision to hold rates suggests a commitment to controlling inflation amidst political pressure. Investors should closely monitor economic indicators and tariff developments to respond appropriately to changes in the cryptocurrency market.
