Fed holds rates, cryptos, stocks trade sideways

The Federal Reserve chose to maintain interest rates at their existing level on Wednesday. This decision marks the second time it has paused since raising rates over a 15-month period to curb inflation.

Ongoing slowdowns in the labor market, coupled with tighter credit conditions, led to the committee’s decision, the central bank wrote in Wednesday’s statement. 

The move is the second time the Fed has paused increases since starting to raise rates in March 2022. Over ten consecutive rounds, it implemented rate hikes, aiming to mitigate the country’s highest inflation in over forty years. However, market concerns about whether a soft landing is achievable continue to persist.

“The US banking system is sound and resilient,” central bankers wrote in Wednesday’s statement. “Tighter credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.” 

Committee members also noted that their previous tightening rounds often lag and monetary policy takes time to become effective. 

“The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans,” the statement read. 

Bitcoin (BTC) and ether (ETH) were largely flat the news, with bitcoin dipping around 0.3% and ether losing just under 1%. Bitcoin has managed to pare losses over the past month, appreciating by around 3.5%. Meanwhile, ether has struggled to reach a price breakthrough, trading down about 3% in the past month, and about 6% in the past six months. 

The S&P 500 and Nasdaq Composite indexes also traded fairly sideways on the news, each posting losses of less than 0.5%.

---

Get the news in your inbox. Explore Blockworks newsletters:

• The Breakdown: Decoding crypto and the markets. Daily.
• 0xResearch: Alpha in your inbox. Think like an analyst.