Fed Keeps Benchmark Rate at 3.5%–3.75% as Outlook Remains Steady

The Federal Reserve released its semiannual Monetary Policy Report on July 14, ahead of Chair Kevin Warsh's two days of testimony on Capitol Hill on July 14 and 15. It is Warsh's first time presenting the report since taking office earlier this year. The key decision remains unchanged: the federal funds rate target range stays at 3.5%–3.75%, matching the level maintained after the Federal Open Market Committee's June 16&17 meeting. The June decision passed 12&0 with no dissents. The Fed also set interest on reserve balances at 3.65%. The next FOMC meeting is scheduled for July 28&29. In the report, the Fed describes an economy still expanding at a solid pace, supported by strong productivity and investment trends that indicate businesses have not materially pulled back despite a challenging global backdrop. Unemployment is described as stable. The report also flags ongoing Middle East tensions as a factor weighing on the outlook. Digital assets were not addressed directly. The report does not mention Bitcoin or any specific crypto assets, though Bitcoin moved back above $60,000 after Warsh's recent comments suggesting inflation pressures were easing. With spot Bitcoin ETFs now established in the market, some traders increasingly treat Bitcoin as a macro-sensitive asset and watch it as a gauge of shifting risk appetite. A separate policy development could become more consequential for the sector. In May 2026, the Trump administration launched a review of digital asset firms' access to Federal Reserve payment systems. Broader access to Fed payment rails would be seen by the market as a structural step toward legitimizing parts of the industry, potentially with more impact than ETF approvals. For investors, the steady 3.5%–3.75% rate range creates a mixed setup for risk assets. The absence of further hikes removes a major headwind that weighed on crypto in 2022 and early 2023, while the lack of cuts keeps financial conditions from easing. In Bitcoin's case, $60,000 has re-emerged as a key psychological level linked to perceived Fed direction; the July 28&29 meeting is viewed as a potential volatility trigger. The review of payment-system access adds a regulatory wildcard, with outcomes ranging from expanded infrastructure opportunities for crypto businesses to tighter constraints. Investors with exposure to crypto-adjacent equities or tokens tied to payments infrastructure are likely to monitor the review closely. The Fed's 12&0 vote in June signals a unified committee for now, as stable unemployment, strong productivity, and geopolitical risks continue to shape the outlook.