Fed’s Neutral Stance on Rate Cuts Leaves Crypto Markets in Wait-and-See Mode

Federal Reserve Chair Jerome Powell's testimony to Congress this week dashed hopes for imminent rate cuts, leaving traders to digest a neutral stance. The Core PCE deflator—Friday's key inflation print—is expected to show a modest 0.1% monthly increase, but looming tariff-driven price hikes from July complicate the outlook. Powell resisted pressure to pre-commit to easing, emphasizing economic expansion, labor market resilience, and inflation uncertainty.

Crypto markets absorbed the message without drama. Prices stabilized as participants aligned with the Fed's wait-and-see posture through Q3. Behind the scenes, Fed Governors Waller and Bowman floated July cut possibilities, but Powell held firm to the FOMC script. The central bank's 2021 "transitory" misstep looms large—officials now demand multiple soft CPI readings before acting.

Markets currently price in 56bps of H2 cuts, but B.R.O. analysts see December as the earliest realistic window for a 50bp reduction. Tariff effects will peak in summer, leaving September's meeting too soon for clarity. For digital assets, this translates to extended range-bound trading—a test of patience for bulls awaiting monetary tailwinds.