Fed Keeps Rates on Hold as Three Officials Back a 25bp Hike

The Federal Reserve held interest rates steady on Wednesday, resisting pressure for a surprise increase while exposing a more hawkish internal split than markets had anticipated. The Federal Open Market Committee voted 9–3 to maintain the federal funds target range at 3.50%–3.75%. Beth Hammack, Neel Kashkari and Lorie Logan dissented, favoring a 25 basis point hike. In its policy statement, the Fed largely repeated June's message. Officials said economic activity continues to expand at a solid pace despite elevated uncertainty tied in part to conflict in the Middle East. The statement pointed to strong productivity growth, robust capital investment, steady job gains and an unemployment rate that has changed little. The Committee said inflation remains above its 2% objective, citing supply shocks including higher energy prices, and reaffirmed its commitment to restoring price stability. Markets had leaned heavily toward another pause. CME FedWatch showed about a 70.6% probability of no change ahead of the decision, while Kalshi traders priced a 77% chance of a hold. Goldman Sachs had warned that a hike would rank among the biggest meeting-day surprises in decades. With the expected hold now in place, attention turns to Chair Kevin Warsh's press conference for guidance on whether additional tightening is still on the table later this year. For crypto markets, the pause reduces near-term policy uncertainty, but the unusually hawkish dissent could keep Bitcoin and other digital assets sensitive to incoming inflation, labor-market and energy-price data ahead of the Fed's next meeting.