Bitcoin price stabilizes near $90,000 as Fed pauses interest rate cuts and Powell remains neutral

Bitcoin price stabilizes near $90,000 as Fed pauses interest rate cuts and Powell remains neutral

Bitcoin hovered around $89,000 on Wednesday as the Federal Reserve opted to keep interest rates on hold, pausing its rate-cutting cycle and taking a noticeably softer tone on inflation and the labor market.

Bitcoin prices traded above $90,000 early in the session, but fell to around $89,500 when Federal Reserve Chairman Jerome Powell spoke at a post-meeting press conference.

The move came after the Fed announced it would keep its benchmark federal funds rate unchanged at a range of 3.5% to 3.75%, ending a streak of three consecutive 25-basis point rate cuts in September, October and December.

The decision reflects the central bank’s growing comfort with the economy’s trajectory, even though inflation remains above target. Policymakers cited slowing employment growth and continued price pressure as reasons for halting further easing.

The Federal Open Market Committee voted 10-2 to keep interest rates on hold, with Governors Stephen Milan and Christopher Waller dissenting in favor of another quarter-point cut.

Milan, whose term ends on Saturday, has consistently advocated further rate cuts. Meanwhile, Waller, one of the candidates to replace Powell as Fed chairman, last spoke out against the Fed in July, when the Fed also left interest rates unchanged.

Fed Chairman Jerome Powell: “The economy is expanding at a steady pace”

The FOMC said in a statement that the economy continues to expand at a “solid pace” and that job growth “remains low” while the unemployment rate is showing “signs of stabilization.” The committee added that inflation “remains at a moderately high level.”

Chairman Powell reinforced that message, stressing that the Fed now views policy as close to neutral after cutting interest rates by a cumulative 175 basis points over the past year.

“It’s hard to say, looking at the data that’s coming, that policy is going to be significantly restrictive right now,” Powell said, calling the current stance “mildly neutral or moderately restrictive, depending on how you look at it.”

That framework was important to the market. Bitcoin has historically responded positively to easing financial conditions, but Wednesday’s price action suggested that traders were recalibrating their expectations for short-term interest rate cuts in preparation for the latest FOMC decision, rather than reacting to outright hawkishness.

Mr. Powell struck a cautious tone on the labor market, pushing back on concerns about a sharp deterioration. He noted that while recent payroll reports show an average of about 22,000 job losses per month, private sector employment remains slightly positive.

He said the slowing growth in labor supply reflects declining immigration and participation, rather than a collapse in demand.

Regarding inflation, Powell pointed to tariffs as a major factor in rising commodity prices, saying they are largely a “one-time” effect rather than a permanent cause of inflation.

Core consumer spending inflation was 2.9% year over year through December, still above the Fed’s 2% target.

“The impact of tariffs on commodity prices is expected to peak and then begin to decline,” absent new trade action, Powell said.

For Bitcoin traders, Powell’s comments reinforced the familiar narrative that while the Fed is no longer tightening aggressively, it is also in no hurry to implement further stimulus. This midpoint supports Bitcoin’s ability to maintain its recent gains while limiting the short-term upside associated with rapid interest rate cut expectations.

Who will be the next Fed chairman?

The issue of succession also loomed at the meeting. Asked what advice he would give to his eventual successor, Powell offered a pointed answer consisting of three elements: stay out of politics, stay engaged with Congress and respect the agency’s staff.

“Stay out of elected politics. Don’t do that,” Powell said, emphasizing the need for the Fed to maintain its independence at a time when its authority faces increased scrutiny, including an ongoing lawsuit involving the central bank in the Supreme Court.

Waller’s opposition and Millan’s resignation have fueled speculation about the Fed’s future leadership and policy direction, a factor that is increasingly being watched by crypto markets sensitive to changes in financial philosophy.

Trump’s choice to chair the Federal Reserve could be announced within one to two weeks, Treasury Secretary Scott Bessent said, according to Yahoo Finance.

Among polymarket bets on who will become the next Fed chairman, Rick Rieder leads the pack with about 37%, followed by Kevin Warsh with about 28%, and Christopher Waller a third behind with nearly 15%.

This article, Bitcoin Price Stabilizes Near $90,000 as Fed Pauses Interest Rate Cuts, Powell Signals Neutral Stance, was first published in Bitcoin Magazine and was written by Mika Zimmerman.