As global markets digest Trump’s aggressive tariff hikes, speculation grows around the U.S. Federal Reserve’s next move. Although the Fed refrained from cutting rates during its latest closed-door meeting, pressure is mounting. Many analysts now anticipate at least four rate cuts before the end of the year. But will the Fed act—and what will that mean for crypto?
According to Dey There, Friday’s meeting ended without a formal decision, yet warning signs are piling up. Stock markets have plunged under the weight of rising trade costs, and even government bonds—typically seen as safe havens—have seen sharp selloffs.
The Fed’s Dilemma: Act Too Soon or Risk Falling Behind?
Fed Chair Jerome Powell remains cautious. The institution prides itself on independence, and Powell is no fan of political pressure. Former President Trump recently called Powell out, urging him to “stop playing politics and do your job—cut rates.”
But historically, the Fed has preferred caution. As Powell has often said, “It’s better to be late than to make a mistake.” That mantra still seems to hold, even as market stress escalates. The Fed is watching carefully, but not rushing.
What About Crypto?
Crypto markets, closely tied to risk appetite and liquidity trends, are watching the Fed like a hawk. Some traders are hoping for an emergency rate cut that could reignite risk assets like Bitcoin and Ethereum. Others speculate Trump might reverse course and suspend tariffs altogether. But neither outcome appears likely in the immediate term.
As Dey There explains, we’re not in full crisis mode—yet. U.S. Treasury yields, while rising, have not reached critical levels. Stock indexes haven’t collapsed more than 50%, and credit markets remain relatively functional.
However, if the situation deteriorates, the Fed’s first move won’t be a dramatic 100 basis point cut. More likely, it would involve a temporary bond-buying operation to stabilize market volatility—without signaling full-blown quantitative easing.
Rate Cut Expectations Are Still Evolving
Market participants continue to debate the timing and scale of any intervention. Expectations for a 25 basis point rate cut in May have now shifted to June, and back again. While some economists forecast a total 100bp cut by year-end, major institutions like BlackRock remain skeptical of aggressive easing.
If conditions worsen, the Fed may eventually respond—but not until it sees no alternative.
Conclusion
For crypto investors, the message is clear: uncertainty reigns. Until the Fed makes its next move, volatility will persist across both traditional and digital markets. And when the central bank does act, it may choose subtlety over spectacle.
References & Sources
Federal Reserve Meeting and Policy Expectations
Trump’s Comments on Powell and Rate Cuts
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