Federal Reserve Keeps Interest Rates Steady, Warns of Softer Economy and Stubborn Inflation

Bitcoin Flat as Fed Stands Pat on Rates, Signals Slower Growth and Persistent Inflation

Bitcoin prices stayed steady just above $104,000 on Wednesday as traders digested the Federal Reserve’s latest policy stance, which pointed to lingering inflation and a cooling economy.

As markets had broadly predicted, the Fed kept its benchmark interest rate unchanged at 4.25%-4.50% during its June meeting.

“Despite volatility from net exports, recent indicators suggest economic activity has continued at a solid pace,” the Fed said in its statement. “The job market remains strong, though inflation is still somewhat elevated.”

The Fed’s updated quarterly projections—including the closely watched “dot plot” showing policymakers’ expectations for interest rates—revealed that officials still expect the fed funds rate to drop to 3.9% by the end of 2025. That implies 50 basis points of cuts this year, the same as projected in March. However, policymakers now forecast slightly higher rates further out, with the rate seen at 3.6% in 2026 and 3.4% in 2027, suggesting a more cautious path for future rate reductions.

At the same time, the Fed trimmed its U.S. growth forecast, expecting GDP to expand just 1.4% this year compared to the 1.7% it projected in March. Inflation estimates rose, with the Fed now projecting PCE and core PCE inflation at 3% and 3.1% for 2025, versus 2.7% and 2.8% previously. The unemployment rate is expected to edge up to 4.5% through this year and 2026, slightly higher than prior estimates.

Bitcoin (BTC) was largely unchanged following the Fed’s decision, trading near $104,200, while U.S. equity indexes, including the S&P 500 and Nasdaq, gained ground.

“The Fed’s dot plot shows a tilt toward stagflation—a backdrop where economic growth weakens while inflation and joblessness remain high,” said David Hernandez, a crypto investment specialist at 21Shares.

Historically, stagflation has been challenging for traditional markets and fiat currencies. Hernandez believes that in such an environment, bitcoin’s scarcity, decentralized nature, and independence from U.S. economic performance could drive interest among investors.

“When growth slows and inflation stays sticky, capital seeks stores of value and growth potential—and for many, that path increasingly leads to bitcoin,” Hernandez said.